ONLY IN WASHINGTON WOULD ONE CONCEIVE OF PUNITIVELY TAXING AN INDUSTRY in order to pay to give away its products. In order to help pay for Obama care Congress has imposed a crippling tax on medical device makers. The total would be about $2 billion a year or $20 billion over the next 10 years. MassDevice, an online medical device publication released an analysis last March suggesting the tax would significantly undermine the profitability of small companies, even pushing some into loss.
Minneapolis-based Medtronic CEO Bill Hawkins told The Wall Street Journal, “This will make us one of the highest-taxed regions in the world, and that’s going to have an impact on the appetite for people to invest inmedical innovation,” adding that the company would likely slash its workforce by 1,000 to absorb the cost of the excise tax.
Other companies such as Kalamazoo, Mich.-based Stryker, which makes orthopedic implants and hospital and surgical equipment, and Chelmsford, Mass.-based Zoll Medical, the nation’s leading manufacturer of heart defibrillators, say the tax will devastate their industry. The option of passing the cost onto hospitals is not promising, since these customers are under pressure to cut their own costs. Since the CEOs of these companies cannot operate at close to breakeven or at a loss, the alternatives open to them are not happy ones: cut back on research and imperil innovation, and/or move to lower cost countries.
What was that about job creation being a priority?