Medical Device Tax Costs 1,000 Jobs

In a cost cutting move, medical device-maker Stryker Corporation recently announced plans to lay off 1,000 workers in advance of the impending medical device tax. By reducing its workforce by 5%, Stryker hopes to save $100 million annually to offset the 2.3% tax on medical devices starting in 2013.  The Obama administration hopes the tax will raise $20 billion in tax revenue from 2013 to 2019 to fund the Patient Protection and Affordable Coverage Act. An earlier study estimated job losses due to the new excise tax will be in excess of 43,000 – or more than 10% of those employed in the industry.  The United States has been shedding high paying manufacturing jobs for several decades.  Jobs in the medical device industry, which pay an average of around $80,000 per year, will be hard to replace.

Comments (10)

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  1. Brian says:

    Maybe it will only have a net cost to society of 950 or so jobs instead of a 1000…….you see, the IRS gets to hire a few extra workers to focus on processing the tax returns, auditing, etc. for medical device makers.

  2. Buster says:

    There’s an old saying in economics… “if you want to encourage something, subsidize it; if you want to discourage something, tax it.” It’s unfortunate that the United States is discouraging high-paying manufacturing jobs.

  3. Devon Herrick says:

    The 2.3% excise tax on medical devices is short-sighted considering the government pays about half of all medical bills. Since medical devices tend to be used on older people, I suspect a greater than proportional share of medical devices are paid for by Medicare. A tax that is heavily borne by Medicare; but still distorts the labor market, serves little constructive purpose — other than to redistribute funds (on paper) to make the ACA appear solvent.

  4. Vicki says:

    Unintended consequences of Obama Care?

  5. Ellen says:

    While the tax is terrible, the fact that manufacturing jobs that pay well are being eliminated here…and very likely moved overseas…is even worse!! It’s yet one more way that Obama is managing to destroy the country’s economic health and prosperity.

  6. Arnie Ree says:

    Another of the few manufacturing operations left in the US takes a blow. Soon, we will be making nothing and consist of only service and money-management industry. Historicaly, that ranks us among the doomed.

  7. Tom H. says:

    Tragic results of misguided policy.

  8. Bob Hertz says:

    Something does not add up in this story, at least at first reading.

    I have assumed (and I may be wrong) that this tax could be passed on the consumers. The device maker would just raise its price by the amount of the tax.

    Since we have seen very large price hikes in the medical drug and device field for years, I doubt we would even notice another hike of a few percent to cover the tax.

    I do not intend to endorse the Obama tax. His bill was full of
    frankly stupid and counterproductive measures to raise $2 or $3 billion a year from twenty different sources. The honest approach would have been to raise income or payroll taxes (which are actually collectible) — and if you couldn’t raise the taxes, then you did not have a big bill.

    But that aside, I suspect that these layoffs had some other primary cause. Someone tell me if I am wrong.

    Bob Hertz,
    The Health Care Crusade

  9. Robert H says:

    Obama tax bill is ridiculous; no way I vote for him!

  10. USABob says:

    “Robert H.” has obviously not been informed. Maybe he hasn’t investigated enough.

    Obamacare is absolutely the worst thing that has ever struck this country by our own elected officials in my lifetime of 75 years. It is at least a pound of 10p nails in America’s coffin. It is Obama and the progressive jerks attempt to drive us to communism. Look at the 1937 USSR Constitution.

    God Save Our Republic!