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Democrats’ health measure will be toxic

The U.S. Supreme Court ruled that Obamacare is constitutional because Congress has the power to tax. And Democrats certainly did pass a lot of taxes.

The Affordable Care Act includes more than $500 billion in tax increases - half a trillion - over the next 10 years, according to Americans for Tax Reform.

The list includes a surtax on investment income, $123 billion; a tax on flexible spending accounts, $13 billion; a 2.3 percent excise tax on the sales of medical device manufacturers, $30 billion; a hike in the Medicare payroll tax, $86.8 billion; a tax on health insurers, $60 billion, an excise tax on comprehensive health insurance plans, $32 billion, etc.

Evan Bayh, a former governor and U.S. senator from Indiana, focused on the tax on sales of medical device makers in a recent column in the Wall Street Journal. (Bayh is a partner at the McGuireWoods law firm, which represents several such companies.)  

"The medical-device industry has been a great American success story," he wrote. "More than 400,000 U.S. workers are employed in this sector directly, and

another two million, including those involved in supply and distribution, benefit indirectly."

Average compensation in the industry: $58,188.

And the United States is the global leader. Americans export $5.4 billion more in such products than we spend on imports of such devices.

But Bayh, a Democrat, makes no bones about the fact that his party's signature legislation - zero

Republicans voted for Obamacare - will have a toxic effect on the makers of medical devices.

"For a typical company, a 2.3 percent tax on revenues equals a 15 percent tax on profits," Bayh wrote. "When combined with a 35 percent corporate tax and state corporate taxes, the tax rate for the medical device industry will exceed 50 percent in most jurisdictions."

Not surprisingly, the industry has announced layoffs, canceled planned expansions, slashed research and development budgets, and moved production elsewhere.

"This month, Welch Allyn - a maker of stethoscopes and blood-pressure equipment, announced that it will lay off 10 percent of its global workforce over the next three years, but all of the jobs being cut are in the U.S," Bayh wrote.

"In my state of Indiana alone, Cook Medical has

canceled plans to build one new U.S. facility annually in each of the next several years, and Zimmer plans to lay off 450 workers, while Hill-Rom expects to lay off 200. Stryker, based in Michigan, anticipates having to lay off 1,000 workers."

Democrats passed the Affordable Care Act in the middle of the worst recession since the Depression.

Workers in some industries will pay dearly for this folly.

Democrats shouldn't be surprised if they do, too.


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