25 September 2012 To: Georgia Taxpayer Protection Pledge signers Re: Expiration of Hospital Bed Tax in 2013 Dear Legislator, As the

national economic recovery continues to sputter, most recently showcased by last week’s dismal jobs report, some in Georgia are calling for a tax increase on the state’s fastest growing industry. Extension of the hospital bed tax, passed in 2010 and set to expire in January, would kill jobs, dampen medical innovation and raise health care costs. It should be rejected. A vote in favor of extending the bed tax is a violation of the Taxpayer Protection Pledge. Voters made known their opposition to tax increases just six weeks ago when they soundly defeated the T-SPLOST at the polls. This is an affirmation of the public’s general distaste for higher taxes, and rightly so: Georgia’s tax code is currently uncompetitive with its neighbors. Tax reform that reduces the burden on families and small businesses is the correct approach. The bed tax is especially onerous for two reasons. First, health care is a booming industry in Georgia. A recent study by Georgetown University found that health care jobs are set to grow at a higher rate than any other industry in the state this decade. Job growth is expected at a 38 percent rate, compared to 20 percent for all other industries. A tax hike during such a promising period of expansion in the industry would inhibit job creation just as Georgia is starting to move past the highest unemployment rate in its history, reached last year. But the bed tax is not only a state issue. The reason it is so enticing to state lawmakers is that it allows state government to take advantage of the federal matching program for Medicaid. While hospitals in the state will be forced to cough up $216 million because of the tax increase, the heavily-indebted federal government will be on the hook for at least $200 million more. Fiscal conservatives should not be looking to Washington for more federal aid, especially when the national debt climbed above $16 trillion for the first time last week. The hospital bed tax is bad policy for Georgia and bad for our country. I urge you to encourage job growth in your most promising industries, not hit those job creators with new or higher taxes. Make good on the promise you made when the bed tax was instituted as temporary – let it expire in January and continue your hard work to make Georgia an economically competitive destination for jobs, investment and growth. If you have any questions on this or any other issue affecting Georgia, please contact ATR state affairs manager Josh Culling at jculling@atr.org. Onward,

Grover G. Norquist

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