"I happen to believe in the people and believe that the people are supposed to be dominant in our society. That they, not government, are to have control of their own affairs to the greatest extent possible with an orderly society." - Ronald Reagan

Taxes have consequences.

Posted: July 21st, 2009 | Author: | Filed under: National | No Comments »

One of the more enduring fictions in politics is that particular groups can be taxed with impunity. Businesses are a font of unending profits that can be curtailed and individual effort remains constant in spite of diminishing returns. It’s an alluring but dangerous idea.

The truth is that businesses have limited revenues and every tax has a consequence. Jobs and compensation may be cut; prices may be raised; dividends may be reduced or eliminated; growth and innovation may stagnate. Like any other cost, taxes must be offset.

Nor is it reasonable to expect that individuals will endure increasingly punitive taxation without reaction. The extent to which a particular tax rate depresses initiative is arguable, but common sense tells us the smaller the carrot the less enthusiastic the donkey.

The health care legislation being debated turns a blind eye to these realities. It relies on the idea that de facto tax increases in the form of mandates won’t result in layoffs and wage reductions. It stands to exacerbate the shortage of health care professionals by reducing compensation and taxing the bejesus out of what’s left. Perhaps a different approach is called for.

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