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Opportunity: Create an Entrepreneurship Impact Statement (Federal, State, Local)

Nearly three-quarters of entrepreneurs believe that government regulations on businesses are complex and hard to follow. Another 65% say that it is too time-consuming for business owners to stay legally compliant with local, state, and federal regulations. While retroactively addressing laws that have had negative effects on entrepreneurs is critical, it is not enough. It is imperative that entrepreneurs be considered from the start as new laws and policies are enacted. To do so, Congress, state legislatures, and local governments should:

  • Require an Entrepreneurship Impact Statement (EIS) for all new laws, regulations, and rules developed that affect businesses less than 5 years old. At the federal level, the EIS would require the Congressional Budget Office and issuing agencies to estimate the direct costs to new businesses (i.e., those less than 5 years old) of changes to laws and regulations so that policymakers become aware of the impact these policies would have on new businesses before bills are passed or new regulations issued. States and localities would enact and follow similar procedures in their respective jurisdictions.

Supporting Evidence

  • The 1995 Unfunded Mandates Reform Act (UMRA) provides a template for the proposed Entrepreneurship Impact Statement (EIS). Analysis shows the UMRA has provided lawmakers with more detailed information that has been used in congressional debate on important intergovernmental issues. In addition, just 14 intergovernmental mandates that exceed the UMRA’s statutory threshold were enacted between 2006 and 2016. While the number of intergovernmental mandates from years prior to the UMRA’s enactment is unavailable for comparison, unfunded mandates were significant enough to make addressing them a top priority for the associations representing state and local governments, and the law helped Congress make reducing unfunded mandates a commensurate priority.