Government has a long history of adopting so-called solutions that are worse than the problem. Sarbanes-Oxley is a recent case in point, now even threatening the international supremacy of America's capital markets. Congress hastily adopted Sarbanes-Oxley in response to the terrible accounting frauds at Enron and WorldCom. The law imposed massive, new accounting and reporting requirements on companies issuing stock listed on American stock exchanges. The Securities and Exchange Commission initially estimated that compliance would impose only an additional five hours of work per company. It later upped its estimate to $91,000 per company. The most recent estimate of compliance costs from Financial Executives International totals $4.36 million per company, about 50 times the SEC estimate. That amounts to a big, new tax increase on business, with only vague and uncertain benefits at best.
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