Net or Gross: Why It Matters for U.S. Medtech Firms

By Joe Pustka

Unfortunately, political pundits often misreport on the times when members of the U.S. Congress are still working together to align policies with common sense. One such case that deserves the spotlight is the bipartisan move to reverse the tax structure on medical device manufacturers where gross revenues, not net profits, are proposed to be the basis of taxes. This is not a minor bipartisan issue. It’s bipartisan—to the tune of Al Franken and Michelle Bachmann singing from the same hymnal!

It’s no accident that the representatives taking up this cause happen to come from two states where the medical device industry plays a significant employment role—Massachusetts and Minnesota. But you can be from any state and still think that taxing net profits is the better way to go because:

As the company that first developed dry-air leak-testing methods for NASA and then applied them to commercial leak detection applications of all kinds and especially leak testing medical devices, Uson knows what it takes to create the intellectual capital that drives high quality medical devices. You can’t work with substandard engineering know how to create leak-proof medical devices—whether they are cardiac catheters, drug eluting stents, or dialysis machines.

U.S. engineers are advantaged. Most who work in the medical device industry grew up around mechanical things of all kinds. Many tinkered under the hood of an automobile or played around with taking apart electromechanical devices of all kinds and then putting them back together while they were still teens. They did these things before they went to school to become an engineer. It helps U.S. engineers have what in other fields might be called “instincts” about how things work and how to make them work better. If you take those kinds of minds out of the medical device industry, you are slowing down progress in ways big and small.

Bottom line: No matter what your political persuasion, it’s time to pick up the phone or write a letter to your senators or congressmen. Don’t let an imbalanced tax structure drive medical device manufacturers overseas.

—Joe Pustka

Putska (pictured on the left) is a medical device leak testing technical support manager for Uson, which first developed high accuracy leak testing methods for NASA, and since 1963 has specialized in leak detection, leak testing, and non-destructive testing for the medical device and medical packaging industries, among others.Putska works with medical device companies throughout North and Central America and has worked with Uson in various technical capacities since 1980.

Top image (of Uncle Sam paying taxes) by iStockphoto