Wednesday, November 21, 2012

Unintended Consequences

It is the law of unintended consequences with governmental legislation or regulation (like the Alternate Minimum Tax) that will always spin out of social engineering control.  The bigger the legislation (like 2000 pages of Obamacare) the more probable and voluminous the unintended consequences will arrive.

We humans are crafty and innovative individuals.  Where there is a system of rules, we will find (and some just for the fun of it) ways to break the rules.  Even the most ethical and prudent among us will fall into this temptation. 

For example - the law of speed limits.  In order to save energy there was a federal mandate (NMSL) in 1974 to establish a national speed limit at 55 mph.  Funny, in 1978 Cincinnati Microwave introduced the Escort Radar detector with the mission of "Drive Smarter". That company's success was an interesting example of an unintended consequence. 

I have great memories of playing with radar detectors ( small time Cop and Robbers stuff) and buying various versions of Escorts during the 1980's.  I even got Dad interested in the fun. Where are those gadgets now?  Sitting in my electronics junk pile.  Why?  because the Congress repealed the NMSL in 1995.  And now Texas has introduced the highest speed limt yet - 85mph

So - we are about to begin another game of Unintended consequences - a game of Simplifying Taxes. 

The Laffler Center for Supply Side Economics estimates that this game is a $431.5 Billion (yes with a big B!) industry already. What forecasts can we predict for this industry in the future? 

I remember asking G.E. (Arthur Andersen Tax Partner) if he was worried about all the Congressional pressure to simplify (and reform) the Tax Code back in the 1980's.  G.E. smiled and said - "Anytime the Government talks about simplifying the Tax Code, it is a automatic signal of exponential growth in the Tax Accounting Industry".

Maybe there is a market for a "Tax Escort"  :)  -  a future Intended Consequence!

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