NCPA - National Center for Policy Analysis

Entrepreneurs Need Freedom, Not More Regulations

March 19, 2015

Entrepreneurship is in decline and studies show more businesses are closing than opening. Other signs of entrepreneurial health indicate that an unprecedented burden has been placed on small and start-up businesses.

The reasons for this are manifold. One policy change - or even a few - will not solve the problem because the problem is caused by the combined weight of hundreds of regulatory or statutory burdens imposed on small and start-up enterprises.

Problems entrepreneurs face include:

  • Poor tax policies raise the cost of capital, impose high taxes on risk taking and impede economic growth. Additionally, the tax system is very complex, imposing inordinately high compliance costs on small and start-up firms.
  • Securities laws and, to a lesser extent, banking laws and practices, restrict entrepreneurs' access to the capital needed to launch or grow their businesses.
  • Environmental and energy regulations raise the cost of energy and limit development of energy resources.
  • The cost of complying with increasingly complex regulations continues to grow rapidly. These rules have a disproportionate adverse impact on small and start-up companies that cannot afford to use limited resources on regulatory compliance rather than growing their business.

Entrepreneurship fosters discovery, innovation and job creation. Without innovation, productivity suffers, which causes real wages to suffer. Entrepreneurs develop new and less expensive products that improve consumer well being.

Therefore, Congress could stimulate the economy by easing regulatory burdens, poor tax policies and ending restrictive banking policies that prevent innovators from accessing the funds they need to do business.

Source: David Burton, "Building an Opportunity Economy: The State of Small Business and Entrepreneurship," Heritage Foundation, March 13, 2015. 


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