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 medicine—for 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.
Consider:
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.
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.