Skip to comments.Evan Bayh: ObamaCare's Tax Raid on Medical Devices
Posted on 09/29/2012 11:21:24 AM PDT by SeekAndFind
The Supreme Court decision in June upholding the Affordable Care Act leaves in place a tax on medical devices that threatens thousands of American jobs and our global competitiveness. It will also stifle critical medical innovation in the industry that gave us defibrillators, pacemakers, artificial joints, stents, chemotherapy delivery systems and almost every device we depend on to save lives.
The 2.3% tax will be charged to manufacturers on each sale and takes effect in January. Many U.S. device companies, in response, have already announced layoffs, canceled plans for domestic expansion and slashed research-and-development budgets. This month, Welch Allyna maker of stethoscopes and blood-pressure cuffsannounced that it will lay off 10% of its global workforce over the next three years, but all of the jobs being cut are in the U.S.
Given the fragile state of the U.S. economy, Congress must move quickly to redress the harm from this tax before it becomes irreversible.
The medical-device industry has been a great American success story. More than 400,000 U.S. workers are employed in this sector directly, and another two million, including those involved in supply and distribution, benefit indirectly. At a time when the economy struggles to produce good jobs, medical-device positions pay well. Average compensation is $58,188 annually compared with a national average of $41,673 annually for all employment, a 2010 Pew Foundation report found.
While the U.S. overall imports far more products than it exports, America is a global leader in medical-device production and sales. Last year the U.S. device industry earned $5.4 billion more in exports than we spent on imports of such devices.
(Excerpt) Read more at online.wsj.com ...
ObamaCare proponent’s reason thusly:
“Sales to medical-device companies would surge after patients newly insured by the Affordable Care Act poured into the system. What the industry lost in margins, it was supposed to make up in greater volume.”
That calculation ignored the fact that the vast majority of medical-device consumers already are covered by Medicare, Medicaid or private insurance. So there will be little or no increase in sales volume to offset the added cost of $30 billionaccording to the Congressional Budget Officeto the industry. This tax comes straight out of a company’s bottom line. Because many devices are sold to hospitals, physicians and other providers through multiyear contracts, the prices are already locked in, so the tax cannot be passed on to the buyer.
For a typical company, a 2.3% tax on revenues equals a 15% tax on profits. When combined with a 35% corporate tax and state corporate taxes, the tax rate for the medical-device industry will exceed 50% in most jurisdictions. Many marginally profitable businesses will then hemorrhage red ink, since they’ll have to pay the excise tax whether they are making money or not.
Also, here is a question that has not been answered:
WHAT ABOUT SOFTWARE THAT CONTROLS THE MEDICAL DEVICES? These apps promise to revolutionize the practice of medicinefor instance, by delivering blood-sugar test results for diabetics.
Should they be part of the medical device tax too?
How is the IRS going to treat this?
I can understand how Evan Bayh feels as his state of Indiana is going to be hit especially hard.
Cook Medical has canceled plans to build one new U.S. facility annually in each of the next several years
Zimmer plans to lay off 450 workers,
Hill-Rom expects to lay off 200.
Stryker, based in Michigan, anticipates having to lay off 1,000 workers.
obama knows nothing about how businesses work.
We are visiting in a rural area today.
Went to the community pancake breakfast, and I was talking to a guy at our table, who lives in southern California who just lost his job because of the coal plants in the Dakotas being shut down.
Apparently his company went bankrupt because they processed something to do with the coal from these plants, 1,000 people no jobs.
They processed stuff passed to another company for something (he was talking like I understood the tech, all I understood was the business model)
So that company will go bankrupt........the trickle down of the closing of coal plants.
That’s just one example, how many more will be effected.
I can see how this additional tax will cause the same sort of negative ripples.
It's worth noting that when it comes to direct delivery of medical services to individuals, Indiana is the top MIdwestern state ~ it's surrounded by other states without effective liability caps. If you're a baby you get born in Vincinnes or maybe Gary ~ or, I guess, you don't get born at all if momma' lives in Illinois (there are exceptions, but for the broad masses not all those exceptions are available)>
Medical devices is one area that US companies are highly competitive internationally and the evil scumbag Democrats want to tax it into submission.
Wah, wah wah...the donkey party owns this monstronsity.
Top Five Worst Obamacare Taxes Coming in 2013
A little late junior.
Actually, he does.
He's actively TRYING to stifle business...more power for Gov't...just like FDR.
Yet Evan Bayh provided the critical vote to pass this tax into law. He could have blocked it.
Yes - Romney - and every GOP candidate challenging a Democrat who supports Obamacare.
(cue series of still images of Obama / Dem Candidate, signing healthcare law, spooky music, families with grim /sad expressions, etc.)
Narrator: Barack Obama (or “Senator so and so vote for”) signed into law a medical device tax that is crushing to our economy and our access to needed health care. The tax has already resulted in thousands of layoffs for American workers, caused plans for expansion and job creation to be halted, and makes it more difficult and more expensive for the sick and injured to get these needed supplies. Imposing taxes for getting sick and injured...Barack Obama...either he doesn’t understand how his policies impact ordinary Americans, or he just doesn’t care. (The Republican National Committee is responsible for the content of this advertising)
If we can sit here and think of this, why can’t they?
The FDA treats the controlling software as subject to its medical device jurisdiction. I would guess the IRS will do the same, but I haven’t studied up on this and had been hoping for repeal of the ACA.
Oh that's Funny they should have thought of this kind of tax 60 years ago so they could vote it down oh wait they did and voted it up ! ooops my bad
My husband works for a medical device company. There are about 4 office employees dumb as a box of rocks with Obama signs on their desks, cars and outwardly touting how terrific ozippy is, it makes us sick.
When asked if they realize they work FOR a medical device company - deer in the headlights look. They have NO clue. Just NO clue. Now where are the Republicans out in force touting how poo runs downhil, stuff hits the fan and then it’s your company that suffers with layoffs. You just can’t fix stupid.
Now IF Romney wins and the poo DOES start hitting the fan - they will blame Romney, am I right?
“Yet Evan Bayh provided the critical vote to pass this tax into law. He could have blocked it.”
Yes... Good little Evan has sat comfortably on his butt in DC for the last twelve years, talkin tough,and diligently voting the DEM party line when it mattered most. Now he sees a particulary nasty scene on the horizon so he is gathering up his millions in his war chest and cruising into oblivion.
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