According to the Committee on Ways and Means and the IRS, compliance with the new healthcare law will take 80 million man-hours per year. Perhaps that sounds like a successful jobs program, as it will keep 40,000 people fully employed, filling out paperwork and sorting through a confounding pile of government regulations. Only problem is, that work is entirely wasteful and creates zero wealth for America as a whole. It would be better for America and for the 40,000 workers to do something useful, like build the empire state building 11 times over, to use the Ways and Means example.
But might it put otherwise unemployed people to work? No, not to any large degree and not any time soon. Instead, it mostly results in a shift of employment from productive activities to unproductive activities, from the private sector to the public sector, and a general cluttering up of the tax code.
Think of a small business trying to comply with Form 8941 – the Credit for Small Employer Health Insurance Premiums, which went into effect in 2010. This form alone takes 40 million man-hours to complete. As a result almost no one does. The Government Accountability Office finds that fewer than 10 percent of eligible businesses take advantage of this credit. But the real problem is that some businesses do try to comply, meaning they pay employees to fill out paperwork rather than build, create, and develop valuable products for customers. The IRS in turn pays employees to interpret, implement, adjudicate, and enforce this law. A virtuous circle, except someone has to pay the IRS. Guess who.