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Medtech Issues in the 2012 Election Year |
In a brief titled, “The Job-Killing Medical Device Tax,” the National Center for Policy Analysis (NCPA) has joined the call to repeal the 2.3% tax on medical devices purchased from wholesalers by healthcare providers. “Though seemingly small, if this tax is implemented it will destroy jobs and stifle innovation,” writes the organization, echoing what many—though not all—in the medical device community are saying. NCPA describes itself as a nonprofit, nonpartisan public policy research organization that seeks to develop and promote free-market alternatives to government regulation.
Noting that the medical device industry paid corporate income taxes of $3.1 billion on taxable income of $13.7 billion in 2006, the tax would add approximately $3 billion annually to the tax burden, a 100% increase, write the authors. Companies would respond in varying ways, they add, from raising prices and offshoring marketing and production to trimming their workforce. Some firms have already begun to pre-emptively make staff reductions: in November 2011, Stryker Corp. announced its intention to lay off 1000 workers in order to cut costs in advance of the tax.
The tax on medical devices was passed in 2010 by Congress to offset a portion of the $1 trillion cost of the Patient Protection and Affordable Care Act (ACA). It is set to take effect in 2013.
“Congress would be wise to repeal the impending medical device tax,” concludes the brief. “The tax will boost the nation’s medical bills while causing the loss of high-paying manufacturing jobs, and the potential tax revenue is relatively small compared to the costs.”
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