Court Review of SOX Gives Hope for New U.S. Jobs

American-based companies compete weighed down with uniquely American costs. American employees are well paid, yet U.S. companies pay the second highest corporate tax rate in the developed world. Most larger companies bear the cost of employee health care compared to other countries where governments or the employees themselves pay. We have a legal system which encourages frivolous but expensive lawsuits against companies. We limit hiring choice by discouraging or barring the best and brightest from coming to the United States. And only American companies have to follow an expensive and intrusive law providing no benefit but imposing huge costs on publicly traded companies. The law is called Sarbanes-Oxley (known as "SOX"). Thankfully, SOX relief may be in sight. The U.S. Supreme Court has agreed to consider the constitutionality of SOX as it may violate the right of the President to appoint government officials who set policy. SOX requires the Securities and Exchange Commission (SEC) to appoint a Board of Accountants who set broad rules requiring public companies to hire other accountants and to follow constantly changing accounting standards. SOX requires every publicly traded company to hire expensive outside accountants to certify almost every aspect of the company's books, going way beyond traditional auditing standards. It is detested by company executives as the costs it imposes provide no tangible benefit and cut down on the company's ability to hire people, market, sell or return dividends to the pension funds and other investors who own these stock exchange-traded companies. If SOX is found unconstitutional by the Supreme Court, then this extremely costly competitive barrier may be eliminated and corporations can hire, invest and reward investors. Ironically, the SOX law has done nothing to stop the bad corporate players. It has put big costs on the good and ethical companies that follow the letter of the law. Reckless banks and other corporate malfeasance followed SOX, but it did nothing to stop the bleeding their impropriety caused employees, investors, our nation and our reputation. Instead SOX has reduced the dominance of our stock exchanges worldwide. Foreign companies that used to choose to be listed on our exchanges now go elsewhere. In 1995, the U.S. had a third of all new stock listings. Today we have 11 percent. It is easy to understand why a company based outside the U.S. would avoid listing in the U.S. because of SOX. It would have to hire legions of accountants, translators and attorneys and incur millions of dollars of expense. No wonder our stock exchanges have lost their dominant position since SOX became law. Among the 2,200 CEA corporate members are many small stock exchange-listed companies. Their sales are under $500 million, yet they can each incur more than a million dollars annually in SOX-related companies. Most of these companies are close to break-even - yet they are laying off employees, under-investing in R&D or even considering dissolving because SOX and related costs have pushed them to lose profitability. If SOX dies, then thousands of costly attorneys and accountants can be redeployed, and American companies can do what they do best - competing worldwide and creating jobs for productive, hard-working Americans.