Because a behemoth can spread the cost of regulation over a larger revenue pie, the percentage hit to each dollar of sales is lower, sometimes much lower. It's the functional equivalent of a regressive tax on small business.
Big business loves regulation, it keeps the competition out.
Here's the Wall Street Journal's Numbers Guy blog:
The Cost of Doing Business in the U.S.
My print column this week examines a study commissioned by the Small Business Administration that finds regulation costs American business $1.75 trillion per year, and cost small businesses — those with fewer than 20 workers — $10,585 per employee, or 36% more than paid by large businesses, those with 500 or more.
The study is the latest in a series from SBA on the topic. “Over the years the studies have tried to incorporate potential ways to improve the computation methods and to make them more comprehensive,” said Nicole V. Crain, Lafayette College economist and co-author of the latest SBA study with her husband, Lafayette College economist W. Mark Crain.Also at Numbers Guy:
The Crains still struggle with a lack of certain key data on costs of regulation. Small businesses’ disproportionate costs for regulation stem primarily from environmental rules, a finding based on data from two decades ago. “At some point, it should become feasible to obtain similar data for more recent years than 1992,” said Thomas Fullerton, an economist at the University of Texas at El Paso who has studied the cost of regulation internationally. “Given the importance of what is being analyzed, that step is practically mandatory.”...MORE
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