The View from Indiana on Tax Increases for Health Care

Diana Furchtgott-Roth of the Manhattan Institute talks to the citizens and business owners of Vevay, Indiana, and finds strong disagreement with a proposal in the House health care bill to levy an 8% tax on the payrolls of employers who do not offer health insurance to their workers. And then there’s the income surtax. From “‘Rich’ Taxes Cripple Small Towns“:

The small business owners of Vevay regard these proposed taxes as a recipe for more jobs lost. Lisa Fisher, owner of the Schenk Mansion Bed & Breakfast Inn, is a cancer survivor who pays for her own health insurance and doesn’t see a need for the government to offer insurance. “I don’t mind paying my fair share of taxes,” she told me, “but the government would rather tax me to death.”

Furchtgott, an economist, also reminds us of the consequences of raising taxes in a recession, or as the case may be, a depression.

Will history repeat itself in the United States in 2009 or 2010? Some economic historians believe that President Franklin Roosevelt’s tax hikes, in particular the Wealth Tax of 1935 and the Undistributed Profits Tax of 1936, worsened the Great Depression by making it harder for firms to accumulate capital for expansion. This was the conclusion of a 1983 study by a young Stanford economics professor, Ben Bernanke, now chairman of the Federal Reserve.

That seems like a safe bet, especially if you can combine tax increases with “the biggest reform of labor law since the Wagner Act,” i.e., the Employee Free Choice Act in whatever guise it takes.

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