Repeal the Corporate Transparency Act
Congress shouldn’t rely on the courts to undo its mistakes.
A new law, the Corporate Transparency Act, would be about to crush small-business owners, invade their privacy and violate their constitutional rights, had it been allowed to take effect as intended on New Year’s Day. It’s a bad law that was smuggled into an unrelated defense bill in 2020 under the cover of Covid-19. Although a federal court has enjoined its enforcement, Congress should take no chances and repeal it immediately.
The statute requires an estimated 32.6 million small businesses to adhere to intrusive reporting requirements that most Americans don’t even know exist. It specifically targets mom-and-pop businesses with fewer than 20 employees and $5 million or less in sales, and it requires them to supply identifying information about the owners of their companies to the federal government. Failure to comply, even unknowingly, could result in civil penalties of up to $10,000 and criminal penalties of up to two years in prison.
Major companies wouldn’t suffer these consequences. Only small businesses—the bedrock of the American economy—would. According to the U.S. Chamber of Commerce, most small businesses have no employees at all, yet the ones that do hire people account for nearly half of all jobs in the country.
Unlike large corporations, which employ scores of lawyers, small-business owners act as their own compliance officers. That means this law would divert their time and energy away from running their companies. Millions of unsuspecting small-business owners—even senior citizens on homeowners’ association boards—could be turned into criminals overnight without their knowledge, since a recent survey suggests that 83% of small-business owners don’t know about the law at all.
Republicans have introduced H.R. 8147, the Repealing Big Brother Overreach Act, which would take this unconstitutional law off the books and protect the privacy and freedom of small businesses and their owners.
The court that issued the injunction against the Corporate Transparency Act called it a “quasi-Orwellian” law that would “rubber-stamp a new form of federal power” with unprecedented mandates, undermine the U.S. system of federalism and set a dangerous precedent. A panel of the Fifth U.S. Circuit Court of appeals stayed the injunction, another panel reinstated it, and the appellate court will hear oral arguments in March.
Congress shouldn’t wait for the courts to rescue it from its own bad ideas. Our policies should unleash the entrepreneurs who fuel innovation, create jobs and keep the American dream alive. We shouldn’t shackle them, regulate them to death and doom them to failure.