Tuesday, March 24, 2009

Bredesen's Tax Hikes Will Hurt Tennessee Economy

The Tennessean is trying to fool people into believing that the taxes Governor Phil Bredesen is proposing to raise as part of his budget will not impact them:

The 2009-2010 budget proposal calls for an increase in taxes on health maintenance organizations (HMOs) and family-owned real estate investment partnerships, known as FONCEs. Combined, the two tax changes would raise $164 million. Otherwise, there are no calls for tax increases.

A tax on Health Maintenance Organizations could have the impact of raising the insurance rates for many, if not most Tennesseans. Most people who have health insurance receive it as a condition of their employment, and many are members of an HMO-oftentimes through no choice of their own. The Governor has just told Tennesseans that if he has his way, their health insurance premiums will go up whether they have any relevant condition or not. An increase in premiums is likely the way that HMO's in Tennessee will compensate for the increase in taxes.

The Governor is also indicating that he is rather cool to economic investment by small businesses, because many small businesses are family-owned and would face a property tax increase if the Governor's budget passes as written. How many potential jobs might be lost because a family business decides not to expand so that they will not have to pay higher taxes.

It seems as though everyone is concerned about Tennessee's unemployment rate, but the Governor isn't keen to take action to bring it down.

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