The ACA: Taxing the Companies Which Help Us Most
Since 2013, the sales of medical devices, including those of pacemakers and surgical equipment have borne a tax of 2.3 percent. This means that for every dollar a medical company makes, they must pay 2.3 cents to the government regardless of whether they made a profit on the sale – i.e. it’s based on gross sales rather than gross profit.
Currently, there’s a moratorium on the Medical Device tax, but that is set to end in December 2017 – the tax will come into full effect as of January 2018 once again.
Taxes likes these usually apply to cigarettes, where discouraging people from consuming them and thus companies from producing them is the goal. But the government isn’t benefitting anyone with this tax – these are surgical or medical devices which prolong the lives of ordinary Americans.
Because of the taxation of these companies, profits fall and the money budgeted for research, development, and innovation falls by the wayside. Medical device manufacturers can no longer afford to create new products while making a loss because of the taxes. This has a snowball effect on how their companies operate. Higher taxes, means higher manufacturing costs. They should make up the shortfall somehow, either by decreasing pay to their employees and losing them, or increasing the cost of their products.
