Paper Cuts: Reducing the Paperwork Burden on Small Businesses
WASHINGTON – Today expert witnesses told the House Small Business Committee that federal paperwork requirements are costing America’s small businesses valuable man hours and money. The hearing focused on the effectiveness of the Paperwork Reduction Act (PRA) and explored possible ways to reduce the paperwork burden on small businesses.
“While the burden of federal paperwork is felt year round by individuals and small businesses, there is no more relevant time to discuss federal paperwork than in the weeks leading up to Tax Day,” said House Small Business Committee Chairman Steve Chabot (R-Ohio). “Right now, individuals and businesses are pouring over tax forms and mind-numbingly complex instructions to make sure they get things right.”
“Currently, federal paperwork is estimated to annually take 11.6 billion hours to respond to or comply with and costs nearly $1.9 trillion. However, the burden may be higher as OIRA and others have raised concerns about the accuracy of agency burden estimates,” Chairman Chabot explained.
“While nearly 75 percent of the overall federal paperwork burden is generated by Treasury, onerous requests from other agencies contribute as well. Examples of these include Census surveys, OSHA reporting and recordkeeping requirements, and third-party or public disclosures, such as food labeling requirements. Laws enacted in recent years like Obamacare and the Dodd-Frank Act have added hundreds of millions of hours to the total.” Chairman Chabot added.
11.6 Billion Hours
“The PRA has existed for more than a generation, but flaws remain in a law ostensibly designed to ‘reduce” paperwork,’ testified Sam Batkins, the Director of Regulatory Policy at the American Action Forum (AAF). “That goal has clearly failed, as the PRA has turned OIRA into a manager of paperwork, one where ‘pseudo-science’ reigns and little hard data exist. Reforming the PRA to increase public participation, eliminate redundant forms, and strengthen benefit-cost analysis, should be a bipartisan exercise. For the next generation of the PRA, government should strive to produce better data while imposing lower costs on respondents and the federal government.”
“In 1997, after amendments to the Paperwork Reduction Act (PRA), the cumulative burden was 6.9 billion hours,” noted Batkins. “Today, it stands at 11.6 billion hours. Small businesses are particularly affected, with 3.3 billion hours of compliance burdens and $111 billion in costs.”
“No one should praise spending hours on tax, health care, or housing forms. However, Americans currently labor under more than 11.6 billion hours of paperwork according to the recent tally from OIRA. For perspective on this incomprehensible figure, it is roughly 35 hours for every man, woman, and child in the U.S. That is a work-week dedicated simply to filling out federal forms and retaining information for federal regulators,” said Batkins.
Reducing Paperwork Burdens will Benefit the U.S. Economy
“The PRA is an important tool to ensure that the federal government avoids the unnecessary collection of information and streamlines the information collection process,” said Leah Pilconis, Environmental Law & Policy Advisor to the Associated General Contractors of America (AGC). “The federal government’s information collections take an enormous toll on the construction industry, which includes predominantly small businesses. Responding to federal reporting requests and documentation requirements consumes large amounts of time, resources, and funds. Any effort to reduce these burdens will benefit both the construction firms that face them and, in turn, the U.S. economy.”
Small Businesses One Regulatory Audit Away from Ruin
“Small-business employers often fall into the ‘they don’t know what they don’t know’ category,” said Frank Cania, the Founder & President of driven HR, a small business based in Pittsford, New York.
“Many of my driven HR clients started and continue operating today because someone had an entrepreneurial spirit and an idea,” explained Cania, who testified on behalf of the Society for Human Resource Management. “Further, although none are experts in, or sometimes even familiar with, the full panoply of employment laws and regulations, they have always made a good-faith effort to be in compliance.”
“As I sit here today, I can think of several clients who were only one regulatory agency audit away from significant hardship or ruin before we started working with them. I say that not to pat myself on the back, but to show that, for far too many small businesses, and far too many well-intentioned and hard-working small-business owners, government forms and data collection may unnecessarily pose their biggest threat to continued success and prosperity,” Cania told the Committee.