The COVID-19 crisis has severely tested individuals and businesses, making access to technologies and services that enabled large swaths of the American economy to move online critical to our economic recovery. In a new paper released today, Competitive Enterprise Institute experts encourage lawmakers at the federal and state levels to go further with deregulation efforts in order to spur innovation and opportunity.
“Policy makers at the federal, state, and local level have acted swiftly to suspend many regulations that stood in the way of responding to and recovering from the COVID-19 crisis. Now they should take the next step and make those suspensions permanent,” said paper lead author and associate director of CEI’s Center for Technology and Innovation Jessica Melugin. “Removing rules that serve as obstacles for entrepreneurs looking to adapt their business to the new, post-pandemic reality will only encourage innovation and aid our recovery.”
In the latest contribution to CEI’s project identifying and removing #NeverNeeded regulations, Melugin, senior fellows Michelle Minton and John Berlau, and research fellows Patrick Hedger and Sean Higgins identify several policy areas where permanent deregulation would help economic recovery, including:
- Suspend Internet Sales Taxes. Small online businesses are struggling to survive during the COVID-19 crisis, despite offering customers a safe way to get goods and services during a deadly pandemic. Suspending or eliminating burdensome state sales tax laws would ease the compliance burden for small online businesses while also providing much-needed tax relief to consumers during difficult economic times.
- Allow Online Sales and Delivery of Legal but Prohibited Items. Some states have rules prohibiting delivery of alcohol, while others ban delivery of certain tobacco products. Since it is necessary to encourage people to stay at home during the pandemic, all such restrictions should be lifted to allow consumers to safely obtain these legal products.
- Repeal Price Controls for Debit Cards and Do Not Extend them to Credit Cards. Credit and debit cards have played a critical role in the COVID-19 crisis, allowing consumers to purchase goods and services while minimizing their interactions with merchants. The Dodd-Frank law’s Durbin Amendment slapped price controls on fees banks and credit unions charge retailers to process debit card purchases. Unable to charge the full cost of processing transactions, banks and credit unions pass the additional costs onto the consumer. Repealing the price controls on debit card fees, and keeping them away from credit cards, will save consumers’ hard-earned money in trying times.
- Allow Flexible Contracting Work Arrangements. Supporters of laws like California’s AB5 claim reclassifying contractors as “employees” is intended to protect struggling workers. But in reality, many Californians have found the law actually limits their ability to find work at all – and a bad situation has only been made worse during the COVID-19 crisis. California should repeal AB5, or at least suspend it during the crisis to encourage hiring. Other states and the federal government should avoid passing such counterproductive mandates.
- End Antitrust Investigations of Successful Tech Companies. Large, innovative tech companies have been invaluable during the COVID-19 crisis, easing the burden of millions of Americans and businesses under quarantine. Unfortunately, politicians on both sides of the aisle see political advantage in trying to “break up big tech.” The Department of Justice, the Federal Trade Commission (FTC), Congress, and many state attorneys general are pursuing antitrust investigations into Google, Facebook, Apple, and Amazon, casting a destructive shadow of uncertainty over an industry that has proven critical to life during the pandemic. The U.S. standard for antitrust law is consumer harm and the current crisis has proven these companies are a huge benefit to American consumers and businesses. With little chance of proving consumer harm, regulators have argued expanding antitrust enforcement to cover data practices, privacy concerns, and the supposed interests of competing business interests rather than consumers. Policy makers should reject this expansion of antitrust laws beyond the consumer welfare standard and lift the shadow of uncertainty over important American innovators.
For more on CEI’s #NeverNeeded campaign, please visit neverneeded.cei.org.