The biggest decline since last year comes in the area of regulations. Simply put, it's becoming costlier and more complicated to start up or maintain a business. More than 100 major new federal regulations have been imposed since early 2009, at an annual cost that exceeds $46 billion. Small wonder we’re stuck in a "jobless recovery."
Yet regulatory freedom is hardly our weakest spot. Indeed, we're above the global average in that category, and all the others -- except one: limited government. In short, it’s not so limited anymore.
The U.S. has the highest effective corporate tax rate in the developed world, and the top individual income tax rate has been raised to 39.6 percent. We’re also saddled with a capital gains tax and an excise tax. The overall tax burden is 24.8 percent of total domestic income, meaning that government confiscates nearly $1 out of every $4 earned.
Total government spending is another Achilles' heel for the U.S. It amounts to 42 percent of gross domestic product (GDP), or what our economy produces in a year. That’s unacceptably high.
And it shows no signs of abating. Under current policies, government spending is headed in one direction only: up.
That’s why we have to get serious about cutting government down to size, overhauling our tax system, and transforming costly entitlement programs. Or is this our last year as a top-10 finalist in the Index?