In Michigan, Obamacare is Already a Job-Killer

[mandym]

While the White House continues its rhetoric on job creation, the job-killing effects of Obamacare are already taking effect. One provision of the law, its tax on medical device manufacturers, is already having a detrimental impact on a Michigan-based manufacturer.

Stryker Corporation has announced that it will cut approximately 5 percent of its workforce by 2013 due to the tax. As Heritage has shown, this isn’t the first device manufacturer to voice concerns about job loss in the U.S. resulting from the tax, and it is sure not to be the last.

Over 110 jobs will be cut in Kalamazoo alone, bad news for a state already facing over 11 percent unemployment. According to the firm:

The targeted reductions and other restructuring activities are being initiated to provide efficiencies and realign resources in advance of the new Medical Device Excise Tax scheduled to begin in 2013.

http://blog.heritage.org/2011/11/19..._medium=Email;utm_campaign=StrategicMarketing

 

[Magnetic Poles]

Just their excuse to those being laid off. Companies don't hire and fire based on taxes. They do so based upon demand for their product or service. They will staff at a level to meet the demands of their customers.

 

[InTheLight]

Just their excuse to those being laid off. Companies don't hire and fire based on taxes. They do so based upon demand for their product or service. They will staff at a level to meet the demands of their customers.

While this is generally true, in this case it is not. State of the art medical medical devices are not cheap and a 2.3% tax on their sales will be significant. How much? Stryker Corporation figures it will cost them $15 million a year.

It's not just high-tech stuff that will be taxed but all medical devices. Things such as bedpans will be taxed.

And it's not profits that are being taxed but it is an excise tax on sales. Many medical device companies are small start up businesses that aren't yet profitable. Approximately 80% of these companies have less than 50 employees. Piling on a 2.3% tax on sales will definitely affect things like employment and R&D funding.

I suppose the strategy of many of these companies will be to assemble the devices outside the United States where labor costs are cheaper.

It so happens that my congressman from Minnesota is sponsoring a bill to repeal this tax. Here in the Twin Cities we have numerous medical device manufacturers like Medtronic, St. Jude Medical, Vascular Solutions, etc. so I hear a lot about it.