Posted by: jhamon | July 9, 2009

True or False? Increasing Taxes Increases Employment

{{w|Henry Waxman}}, U.S. Congressman.

Henry Waxman

Regardless of your political persuasion, it’s important to remember that the engine of American freedom and growth is not government, but free enterprise

The Soviet Union learned this the hard way.  The basis of free enterprise is a legal and economic framework in which those with money to invest – capitalists – put their assets at risk with the hope of producing a return.  If the stagnation of the 1970s taught us anything, it is that excessive tax rates, whether explicit or wrapped in some camouflage like “fees” or unfunded mandates, reduces the probability of a return on capital.  Investors don’t see the return and so they won’t take risk.  Their choices are either to: 1) do nothing, or worse 2) take their money somewhere else.

So it’s very distressing to see that the current Powers That Be are seeking to pay for health care by taxing the wealthy.  While this may have some short term benefit, this kind of thinking will result in a long term depression of economic activity at exactly the time when we need to be rebuilding our profoundly broken credit system and unemployment sits at generational highs with no end in sight.  HT to @FlashFusion for pointing me to House Dems look at taxing the rich for health care:

WASHINGTON – House Democrats working on President Barack Obama‘s goal of health legislation are narrowing in on an income tax surcharge on the highest-paid wage earners to help subsidize insurance for the 50 million people who lack it.

Pushing to complete a comprehensive health care overhaul plan by Friday and bring it up for committee votes next week, House Democrats abandoned earlier money-raising proposals, including a payroll tax. They met behind closed doors Thursday to fine-tune the details.

Rep. Henry Waxman, chairman of the House Energy and Commerce Committee, said he expected to have a draft bill on Friday… Rep. Shelley Berkley, D-Nev., a member of the panel, said the panel is looking at a surtax around 3.5 percent.

In addition, key lawmakers are expected to call for a tax or fee equal to a percentage of a worker’s salary on employers who do not offer health benefits.

Yikes!  Deja vu all over again…


Common Sense Exam #2:

Placing “a tax or fee equal to a percentage of a worker’s salary on employers who do not offer health benefits” so that the cost to employ people increases will result in:

  1. Employers hiring more people,
  2. Employers laying off more people, or
  3. I have no clue because I have no common sense.



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