Government Thuggery Doesn't Always Have A Billy Club Behind It
From the WSJ, Institute for Justice president Chip Mellor writes about some of the stories I've blogged recently about people who are being forced to pay fees and go through hours of training in licensing schemes that funnel thousands of dollars to Big Government and sometimes benefit competing big businesses:
For decades, Elmer Kilian has prepared tax returns for his friends and neighbors on his lace-covered dining room table. He is typical of more than 350,000 American tax preparers who may now be put out of business because of an IRS power grab.Under new regulations imposed last year--without congressional approval--the IRS now requires all paid tax preparers to become "registered tax return preparers" by paying extra fees, passing a government exam, and taking continuing-education classes annually. (Exempted from the mandate are attorneys, CPAs and politically powerful "enrolled agents.") Big tax-preparation firms such as H&R Block and Jackson Hewitt supported the licensing scheme, as did lobbying groups representing CPAs and others who are exempted from new regulation.
This new regulatory burden falls most heavily on independent tax preparers, who may soon be forced out of business. Compliance, especially for seasonal preparers like Mr. Kilian, is both expensive and time-consuming. Out-of-pocket costs of up to $1,000 for continuing-education courses, plus the travel and time required to take the classes, would make Mr. Kilian's venture unprofitable.
Lissette Waugh has a similar story, but her troubles stem from onerous state regulations. A highly sought-after makeup artist from Las Vegas--with clients including Salma Hayek and Arnold Schwarzenegger--Ms. Waugh wants to earn a living by teaching others her craft. The problem is that, even though you don't need a license to be a makeup artist in Nevada, the State Board of Cosmetology is demanding that Ms. Waugh obtain an expensive government-issued permission slip to teach others how to do what she does.
To get that license, she must submit to 700 hours of training and spend thousands of dollars. That's 700 hours she would otherwise spend teaching others to support themselves. Instead, she'll spend them pursuing a pointless piece of government-mandated paper. Nevada's incumbent cosmetology industry, of course, supports such requirements.
More than 100 low-income and moderate-income occupations require licenses somewhere in the 50 states and Washington, D.C. They range from the understandable (school bus driver, emergency medical technician) to the ridiculous: interior designer, makeup artist, florist.
As Mellor winds up his piece:
Untold entrepreneurs stand ready to start their economic engines--if only government officials would relinquish the keys.
I can't wait to tell my sister she's politically powerful. I'm quite sure she will be tickled pink.
nonegiven at August 19, 2012 2:00 AM
I'm assuming she's a CPA or something similar?
This is the typical situation that you see in unions, especially in states that aren't right-to-work.
She is probably a member of some organization like the American Institute of Certified Public Accountants (AICPA). The AICPA lobbies congress and state legislatures on behalf of the members. The members may not agree, but they are stuck. If the AICPA membership starts dropping then they lobby congress to require membership. This is what happened with the National Association of Realtors.
The rank and file members don't know, don't care, or even support the positions held by the management of the group.
Jim P. at August 19, 2012 6:19 AM
She is a CPA and an Enrolled agent. I don't know which professional organizations she is a member of but she is in a right to work state. I do know that she has a lot of continuing education for both the CPA and the Enrolled agent status. It isn't like it's a politically appointed status, it involves demonstrating and maintaining competence with the tax code and the changes in it. You don't have to be a lawyer or a CPA to be an Enrolled agent, they just want to make sure you aren't wasting their time when you represent a taxpayer when they are dealing with the IRS. There are some incompetent and scammy tax preparers out there that get business by getting people bigger refunds then disappear when it turns out they don't know or care about what they are doing. People have gotten left holding the bag and owing a lot of money.
Personally, I think they should simplify the tax code so it is easier to understand and do your own taxes. I can read the instructions 2 or 3 times and still say, "Huh?" The complexity has just gotten ridiculous.
nonegiven at August 19, 2012 8:58 AM
> it involves demonstrating and maintaining competence
If I may speak to two areas I know:
In the software engineering world, we do this by delivering good products that the customer likes. Do it, and the customer comes back.
In the non-fiction writing world, we do this by delivering good products that the customer likes. Do it, and the customer comes back.
From what I hear, it works the same way in the graphic design world, landscape world, house cleaner world, ad copy writing world, advice column world, etc.
...but I'm supposed to believe that it wouldn't work for tax preparers?
TJIC at August 19, 2012 10:02 AM
Maybe for tax preparers, not necessarily for lawyers who argue before the Supreme Court or represent taxpayers with the IRS. What about electricians? Do you want to find out they are no good by way of your house burning down? They are also licensed and have to have continuing education to keep it. Maybe being audited isn't as fatal as a house fire can be but who would you rather represent you when you have to defend deduction on your return? Someone who has prepared a lot of tax returns or someone who has prepared a lot of tax returns and is certified to do it? The teaching makeup thing, I think may be more than a little ridiculous. I don't think it will cost you your freedom if your cosmetology teacher turns out to be lousy.
nonegiven at August 19, 2012 10:41 AM
Amy Alkon
https://www.advicegoddess.com/archives/2012/08/government-thug-1.html#comment-3309980">comment from TJICI go to my tax guy (whom I absolutely love) because my neighbors had used him for years and talked about him in glowing tones. Not because he's handsome (he's kind of cute) but because they find him really good. When the economy and the newspaper crash ate away my earnings, my need to economize overtook my desire to be loyal and I switched from my expensive guy in NYC to their guy. Not only is my new guy cheaper, I think he's better (in part because he's more used to dealing with creative freelancers [on a tax level]).
Is he licensed? Was the other guy? I have not a clue in the world.
Amy Alkon
at August 19, 2012 11:33 AM
I can see some certification requirements for electricians and other trades, either through union, trade or government credentialing system. The problem with lumping electricians into one category and testing them all the same is that the lineman from your electric company is probably never going to be in your house and running wires. The responsibility ends at the meter. So he just needs to know how to handle 240v or 480v lines and figure rough distances from the last transformer to your meter.
The guy inside your house needs to know how to conduit and run wires safely in walls.
Throw on top of that my mother worked for Western Electric making computer chips many years ago. She had to be a member of the International Brotherhood of Electrical Worker's union.
None of them need to know how to wire up the electrical plant in the Grand Coulee Dam.
Take a guess what a master electrician has to know how to do to get a master certification as an electrician?
The same sort of thing happens in carpentry. The guy building fine wood furniture and selling it as a side job is different than the carpenter building a house. But they have to know everything.
What will happen with this regulation is that they will insist that the tax preparer who does his neighbor's taxes and handles a few small business owners will have to know how fill out a Fortune 500 company's tax return. That will squeeze out the small person because they would have to sit through hundreds of hours of courses at a prohibitive cost. Or the other side -- there will be a certification test mill like what happened with MS Certified Engineers.
Either way it won't be pretty.
Jim P. at August 19, 2012 1:54 PM
Jim, to add to that: licensing is far from being a guarantee of good electrical work. The electrician who did the rough in our house was licensed (and his work was inspected), but I wound up having to re-do a lot of it. My dad's a degreed EE and has had a PE license (although he doesn't now), and he shakes his head at a lot of the work he sees, especially residential.
Cousin Dave at August 19, 2012 4:25 PM
I'm glad makeup artists need to be certified. They are putting chemicals on your skin, next to mucous membranes. To me that's serious business.
And yes, I do believe one needs to be certified to teach. It's called a "barrier to entry," that is, we don't want people who don't know shit about nuthin hanging out their shingles--in any industry.
Interior designers need to be certified because they are often ordering walls removed and built, as well as other constructiony stuff like rewiring and replumbing. Do you want just any old person to be able to hire someone to order the removal of a load bearing wall in your home? Didn't think so.
deathbysnoosnoo at August 19, 2012 4:54 PM
Amy Alkon
https://www.advicegoddess.com/archives/2012/08/government-thug-1.html#comment-3310180">comment from deathbysnoosnooI'm glad makeup artists need to be certified. They are putting chemicals on your skin, next to mucous membranes.
Should I also need to be licensed in order to apply my eyeliner?
Amy Alkon
at August 19, 2012 7:47 PM
Do you put on your own makeup in the morning like millions of other women? And why should anyone need a cosmetology license to do threading? Or piercing ears?
Probably 99.5% of all makeup artists, outside of stage and screen or orthotics, are using some commercial preparation, or a combination of them.
That is good idea. But why do you need a license to arrange flowers. Is there something exotic you have to learn or a "barrier to entry" to know if a bunch of flowers look good in a vase?
You're confusing or conflating an interior design with remodeling. Most interior designers will say add a shelf, repaint, new furniture, etc. Doing remodeling work the designer will bring in a contractor -- usually one that has half a clue and knows about constructiony things.
I and many others have general handyman skills and have done our own remodeling. We know better pull a wall that would cause the house to collapse.
Do we need a license?
Jim P. at August 19, 2012 7:58 PM
DBSS,
"Any old person" can do the things you think are so horrible for any old person to do.
I'm not a certified makeup artist, yet I apply makeup almost every day.
I have no intention of teaching, but if I so chose, in MN, where I live, I could be a certified teacher for high school by passing a test that takes three and a half hours to complete, for a fee of $130. You've claimed to have genius level IQ, so surely you can see that 3.5 is less than 700 right?
And I have never studied interior design at all, let alone being certified, and yet, I can hire someone to order the removal of a load bearing wall in my [sic] home. I can even do it myself, if it's my home. And I'm sure as hell not letting someone order construction on my home without approval from me, no matter what certifications they have.
These people, whatever they're being certified for, are people. Even with certification, they could be crappy makeup artists, or teachers, or interior designers, or tax preparers.
The only thing the certification does is make people feel as though they bear no responsibility for not doing their own research before hiring whoever it is.
Once again, you sound as though you are being contrary just to disagree with Amy. Congratulations, you can now go back to feeling superior to everyone in every way. Because you are smarter than all of us, and super hot to boot, right?
Jazzhands at August 19, 2012 8:34 PM
As far as those exempted categories go, they are already under regulations that, at least in theory, cover what the RTRP does.
silverpie at August 20, 2012 5:00 AM
I am not a certified electrician. My dad is a master elecrtician. I can wire a house better than most certified electricians, when lightning struck my home I had to rewire my swap cooler down thru the switch and repleced the line between the switch and the breaker box just to be on the safe side.
lujlp at August 20, 2012 6:58 AM
Snosnoo, the mistake you keep making is assuming that licensing, or any other form of government oversight, is a guarantee of good work. (Or even that it increases the probability of good work very much.) The general contractor who "built" our house was fully licensed and certified. He was also, as we found out, a personality-disordered hack who: made changes to the architect's plans without permission, closed up the walls without a framing inspection, unnecessarily antagonized the city inspectors, didn't pay his subs, consistently missed deadlines, tried to charge for work not done, moved materials and money between jobs, and eventually abandoned our house 2/3 complete. The wiring I did was better than the wiring his licensed electrician did.
Way too often, too many things go wrong with licensing, and it becomes simply a tax and/or a way for the biggest firms in a particular market to shut out competition. I will grant that the purpose that licensing is supposed to serve is a legitimate one. But it's rare that a licensing mechanism actually achieves that purpose.
Cousin Dave at August 20, 2012 7:00 AM
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