In the past two weeks we’ve seen op-eds from Indiana Senator Dan Coats in Politico and former Senator Evan Bayh in the Wall Street Journal emphasizing the devastating effects the medical device tax will have on manufacturers and American competitiveness come January 1st, 2013. To date, the medical device industry employs more than 400,000 employees in the United States and continues to be a global leader in the sector for delivering groundbreaking technology and innovation.

As a result of the health care reform legislation, medical device manufacturers will face a 2.3% excise tax on every medical device sale. Senator Coats states that the device tax is estimated to cost the industry more than $20 billion over next decade. A direct consequence of this tax is that companies have already begun to scale back their workforce and abandon plans for expanding their operations. Senator Bayh mentions that for a typical company, the 2.3% tax on sales amounts to a 15% tax on profits. When combined with the 35% corporate tax and state corporate tax rate, the tax rate for medical device manufacturers would exceed 50% in many jurisdictions. It is clear that the effect of this tax will be particularly devastating for small and medium sized manufacturers.

With only 25 days until the election, we must ensure that Congress repeals the medical device tax when they return to Washington in November to make sure the success this industry has generated continues into the future and that American jobs do not move off-shore.

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