Skip to comments.Medical device tax could kill 11 percent of U.S. med-tech jobs, AdvaMed says
Posted on 09/08/2011 8:10:57 AM PDT by Sopater
An excise tax on medical devices, set to go into effect in 2013, could mean a nearly 11 percent cut for the U.S. medical technology sector and add $2.67 billion to the industry's annual tax bill, according to a study funded by the Advanced Medical Technology Assn.
Medical device industry lobby AdvaMed says that the new 2.3 percent excise tax, slated to go into effect in 2013, will be "the last straw on the camel's back" for medical device companies trying to thrive in the struggling American economy.
The tax puts more than 43,000 U.S. jobs at risk by all but forcing medical device companies to move production offshore to avoid higher taxes, according to the study.
"The medical device industry is a leader in innovation and in well-paying jobs," lead author and Manhattan Institute senior fellow Diana Furchtgott-Roth said on a conference call. She argued that the government should make the US a more "job-friendly environment" instead of imposing taxes that could push companies outside its borders.
(Excerpt) Read more at massdevice.com ...
The tax is bad enough, but it will be passed along to your health insurance rates.
Medical device manufacturers know that once Obamacare is in place, new devices that cost more than the old ones will not be allowed.
So the manufacturers are trying to get their last generation systems into the market before 2013.
Once Obamacare is in place, manufacturers who want to make a profit will have to sell the current generation systems for less....that means reducing manufacturing costs without changing the device (that would require FDA approval).
As a result, most of the manufacturers will move assembly overseas to reduce costs.
They have money, and they have the Citizens United decision.
Time for the Medical Device companies to go out and do something about this.
The excise tax was a component of the absurd steps to construct the facade that Obamacare is revenue-”neutral.” That tax absolutely needs to go away.
And that will cost lives and cause numerous otherwise avoidable surgeries to replace defective Chinese parts.
A little more of OBAMA and Zimbabwe will begin to look like a retirement haven. IMHO
that’s the tax and spend, democrat plantation for you.
we’ve got to get someone that understands the economy in the presidency.
In a way what this story really demonstrates is that Dems and perhaps some Repubs as well don’t get a fundamental problem in the U.S., i.e., the gov’t needs to find new sources of revenue, but anytime it passes a tax on business, business response is to do a cost/benefit analysis between paying the tax or moving offshore. To an ever increasing extent the answer that pops up from the analysis is to “move”. One of the obvious reasons this is happening is that rather than be honest about the need to both raise revenue and cut spending, the pols ignore the spending part and seek to raise revenues. But worse, rather than be honest and raise taxes on individuals through a VAT tax, they take the so-called “stealth” route and raise taxes on businesses who then, of course, pass the tax on to the consumer, or.......depending on the type of tax and the size of the tax, move offshore to dodge the tax altogether. There’s no easy way out of the 15 trillion dollar hole and this is a Congress of Cowards.
And because your healthcare will be paid by the gov't, you (or your estate) will have no right to sue.
The way to raise revenue is to expand the economy and create jobs. Increasing taxes on income or thru a VAT is not the way to go.
But worse, rather than be honest and raise taxes on individuals through a VAT tax, they take the so-called stealth route and raise taxes on businesses who then, of course, pass the tax on to the consumer,
Do you understand how a VAT works? Don't you think that this will raise prices on consumers? A value added tax (VAT) is a form of consumption tax. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the "value added" to a product, material or service, from an accounting point of view, by this stage of its manufacture or distribution. The manufacturer remits to the government the difference between these two amounts, and retains the rest for themselves to offset the taxes they had previously paid on the inputs.
The "value added" to a product by a business is the sale price charged to its customer, minus the cost of materials and other taxable inputs. A VAT is like a sales tax in that ultimately only the end consumer is taxed. It differs from the sales tax in that, with the latter, the tax is collected and remitted to the government only once, at the point of purchase by the end consumer. With the VAT, collections, remittances to the government, and credits for taxes already paid occur each time a business in the supply chain purchases products.
Personal end-consumers of products and services cannot recover VAT on purchases, but businesses are able to recover VAT (input tax) on the products and services that they buy in order to produce further goods or services that will be sold to yet another business in the supply chain or directly to a final consumer. In this way, the total tax levied at each stage in the economic chain of supply is a constant fraction of the value added by a business to its products, and most of the cost of collecting the tax is borne by business, rather than by the state. Value Added Taxes were introduced in part because they create stronger incentives to collect than a sales tax does. Both types of consumption tax create an incentive by end consumers to avoid or evade the tax, but the sales tax offers the buyer a mechanism to avoid or evade the taxpersuade the seller that he (the buyer) is not really an end consumer, and therefore the seller is not legally required to collect it. The burden of determining whether the buyer's motivation is to consume or re-sell is on the seller, but the seller has no direct economic incentive to collect it. The VAT approach gives sellers a direct financial stake in collecting the tax, and eliminates the problematic decision by the seller about whether the buyer is or is not an end consumer.
The "value-added tax" has been criticized as the burden of it relies on personal end-consumers of products. Some critics consider it to be a regressive tax, meaning the poor pay more, as a percentage of their income, than the rich. Defenders argue that excising taxation through income is an arbitrary standard, and that the value-added tax is in fact a proportional tax in that people with higher income pay more at the same rate that they consume more. The effective progressiveness or regressiveness of a VAT system can also be affected when different classes of goods are taxed at different rates. To maintain the progressive nature of total taxes on individuals, countries implementing VAT have reduced income tax on lower income-earners, as well as instituted direct transfer payments to lower-income groups, resulting in lower tax burdens on the poor.
I read once that if you want to say add a new hole inthe frame of a wheelchair say for example you want to make it more adjustable, the newly modified wheen chair is considered a completely new model and has to go through an entire new round of testing through the FDA as if none of the previous testing mattered at all....
This is part of the problem with the medical equipment industry, innovation is smothered by government regulations.
Any Tax on producers will ALWAYS be passed onto the consumers and a VAT tax will be an indirect Tax on the poor.
Based upon your response, I’m not quite sure that you understood the thrust of my comment; I wasn’t advocating a VAT tax, I was simply using it as an example of a consumption type tax. I know how a VAT tax works. I also know that a way to raise revenue is to expand the economy. Problem is........that’s not happening and the jobs aren’t coming back.
And really all of this is a rather mute point at this time in U.S. history where it’s saddled with 15 trillion in debt. The U.S. gov’t currently spends 4 trillion a year and only takes in 2 trillion in reciepts. At the same time, 900 million of it’s annual expenditures is to the poverty programs for which spending has increased 40% during this administrations tenure in office.
The reason the discussion is mute is simply because there isn’t any mechanism for this country to ever repay the 15 trillion and at the same time, borrowing 2 trillion a year puts it further in the hole each year. Realistically speaking, a default of some sort is inevitable. And the discussion around the water cooler in my office is how to move assets/money, etc. out from under the house of cards before the default occurs. 99% of the American inveting public is ignoring this problem with the thought in the back of their minds that somehow, someone will pull a rabbit out of a hat and erase the 15 trillion in debt. It isn’t going to happen; the rabbit is dead.
What jobs are not coming back and why can't they come back? And what about creating more than a million jobs thru removing the barriers for us to develop domestic sources of energy? Or why not attract capital back into this country by reducing taxes and regulations? There is plenty we can do to both create and bring back jobs.
And really all of this is a rather mute point at this time in U.S. history where its saddled with 15 trillion in debt. The U.S. govt currently spends 4 trillion a year and only takes in 2 trillion in reciepts. At the same time, 900 million of its annual expenditures is to the poverty programs for which spending has increased 40% during this administrations tenure in office.
In 2010 the figures were $3.5 trilion in expenditures and 2.2 in revenue. There is no doubt that means tested welfare payments are hurting both federal and state budgets. Your $900 billion is a bit overstated for federal level expenditures.
The reason the discussion is mute is simply because there isnt any mechanism for this country to ever repay the 15 trillion and at the same time, borrowing 2 trillion a year puts it further in the hole each year. Realistically speaking, a default of some sort is inevitable.
Nonsense. We have more than enough to pay the interest to our bond holders. Yes, we have to cut spending and reform the entitlement programs, but default is not inevitable nor even a likely possibility.
And the discussion around the water cooler in my office is how to move assets/money, etc. out from under the house of cards before the default occurs. 99% of the American inveting public is ignoring this problem with the thought in the back of their minds that somehow, someone will pull a rabbit out of a hat and erase the 15 trillion in debt. It isnt going to happen; the rabbit is dead
Paying off the $15 trillion isn't the immediate objective. It is to change the spending arc and deficits downwards towards a balance budget in a decade or so. Growing the economy will help reduce deficits and if we reform the entitlement programs and decrease spending, the debt will become a smaller portion of GDP. Obviously, the status quo is not sustainable.
I’m not really sure what your point is, but to say:”Paying off the $15 trillion isn’t the immediate objective. It is to change the spending arc and deficits downwards towards a balance budget in a decade or so. Growing the economy will help reduce deficits and if we reform the entitlement programs and decrease spending, the debt will become a smaller portion of GDP. Obviously, the status quo is not sustainable.” is absolutely ludicrous. You balance the budget, assuming that will be done and there’s little chance that it will, then the ever increasing interest on the debt will ultimately eat the entirety of the U.S. budget. And that’s only part of the problem. The truth is that it’s impossible to “grow” this economy fast enough to ever catch up with the growing debt. And why is that the case? Because of the huge number of people who live off the gov’t rather than work and pay taxes to the gov’t.
This thing is cooked, it’s done, you can stick a fork in it. If you want to continue to drink the elites establishment kool-aid, that’s your business, but in the end it will kill your financial well being.
Not if you grow the economy and make the debt a smaller portion of GDP.
Good. The major problem with holding down government spending is that low-income voters pay little-or-no taxes, while benefiting disproportionately from government spending. Thus they will vote for big spenders.