Saturday, July 03, 2010

And another underground business is born ~ By Patrice Lewis

In this column, Patrice makes a good point about what is going to happen because of new fees for tattoo and piercing parlors in the State of Washington. Patrice rightly states that it is called the "Law of Unintended Consequences, in which the outcome is not the result originally intended by a particular action."

So rarely do additional regulations and higher taxes and fees have any positive effects, don't you wonder why politicians come up with these things? I think it has to be for just two reasons: 1) the insatiable lust for power and authority over people, and 2) sheer arrogance that they are smarter than "the small people" they rule over, and they know what's best for us.

But there's more... Patrice leaves us with a link to a website that I was checking out after reading her column.  This is a must see story: "Six Months to Go Until The Largest Tax Hikes in History." The thought that the Federal government would do this to us during a recession is a real head-scratcher. And this is when there is already talk of a double-dip recession, let alone no end in sight to the current recession. Only, as I've been saying (see my twitter bio), I truly don't believe that the result will be "unintended consequences." Just sayin'...

And the problem is, this is just the beginning. As the recession worsens and tax revenues drop, governments will start imposing even more apparently random taxes and fees on mainstream businesses to get more money in their coffers.

It's not going to go away. As our legislators and government executives become more frantic with the continuing failure of our regulated economy, it won't just apply toward tattoo parlors or cigarettes or liquor or other products or services on the margins of society. They will be coming for you next. Count on it.

By Patrice Lewis

Posted: July 03, 2010 ~ 1:00 am Eastern

© 2010

My husband came in from his shop recently and announced, "Well, another underground business is born."

It seems he heard a news report on the radio that Washington state is now requiring tattoo and piercing parlors to purchase a license before they can conduct business. A separate license costing $250 is required for each activity (tattoos and piercings), and an addition license costing $300 is required for the parlors where these activities take place.

So with the stroke of a pen, a select genre of business is now required to cough up $800 a year for no discernible benefit. "I've been hit with an $800 tax, and I don't even know what I'm paying for," says one shop owner.

Now, I care about tattoo and body piercing parlors about as much as you do, but why are they getting picked on?

Naturally, the legislators who passed these new regulations did so out of (cough) the goodness of their hearts … meaning they're sooooo concerned about the health issues associated with the tattooing industry.

"Washington's new requirements fall in the middle of the road compared with other states," notes the article. "On the strict end, Oregon requires 368 hours of training at a state-approved school, followed by a written exam. … On the loose end, Delaware's only regulation is the prohibition of tattooing minors."

So here's a question: Are Oregon's tattoo parlors any safer than Delaware's? And how many tattoo parlors are going to start operating illegally in the state of Washington because certain shop owners choose not to become regulated? "If people are tattooing illegally, they're going to keep tattooing," says one shop owner.

Tattoo and piercing parlors operate on the dark edge of society anyway. All it may take is one little push – like this – and many will slide completely underground. They'll do piercings and tattoos in their basements or garages. Sanitary conditions may decrease since, of course, they can't risk any government inspections of their facilities to make sure they're complying with health codes. All because, yet again, many businesses do not want to be additionally regulated and taxed by the government and will avoid it however possible.

It's hard to use tattoo parlors as an example of potentially unnecessary regulation since there can indeed be serious health issues associated with piercings and tattoos. So why not regulate them?

Well, let's look at another example. I recall a college class that dealt with the economic impact of environmental regulations. Almost to a person, the students in the class were of the liberal, environmentally conscious persuasion who typically looked to the government to pass laws to modify peoples' behavior. The professor took suggestions from the students on how to encourage people to reduce their garbage output and increase their recycling efforts.

The most passionate and enthusiastic suggestion was to increase fees for dumps and garbage service to discourage people from producing more garbage.

The professor shook his head. "It's been tried, over and over again," he replied. "But studies have shown that in places where garbage fees increase, illegal roadside dumping goes up dramatically. You can't 'sin tax' people into compliance because they will look for loopholes, legal or illegal, to avoid paying extra money. In this case, increasing fees does NOT make people produce less garbage. It simply means they will take their garbage and dump it on the sides of roads, thereby increasing pollution and littering."

This made perfect sense to me. But – and I'm not kidding – the students didn't believe him. Anguished cries of, "Oh people wouldn't do that!" came from across the class. I believe I remember the professor shaking his head in disbelief.

See, this is called the Law of Unintended Consequences, in which the outcome is not the result originally intended by a particular action. In these examples, the original intentions were to regulate tattoo parlors and reduce garbage output (and increase revenues). The consequences are underground tattoo parlors and increased garbage along the highway.

What it boils down to is people don't like being regulated, taxed, coerced, bullied, intimidated, or otherwise picked on by the government – and they will do whatever it takes to avoid that punishment by going underground or doing things below the level of the law. And then lawmakers wonder why the laws failed, or why crime increased, or why more people get ill from unsterilized tattoo needles, or why more garbage is tossed on the side of the road.

I'm not an economist. I don't even play one on TV. I really don't understand all the subtleties and intricacies of economics. But even I can get the connection between increased government regulations and a decreased compliance and/or tax base. Let's be honest, it ain't rocket science.

It staggers me that this connection is not more obvious to those who approve of raising taxes and increasing regulations on businesses. It's been demonstrated over and over that fewer regulations and lower taxes allow entrepreneurial businesses to bloom. Reverse that, and businesses wither and die. This falls under the category of "No duh."


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