Contact FreedomWorks

400 North Capitol Street, NW
Suite 765
Washington, DC 20001

  • Toll Free 1.888.564.6273
  • Local 202.783.3870

Blog

    Medical Device Tax Destroys Jobs and Research

    12/15/2012
    Personal Freedom and Prosperity 104: Taxes Diminish Personal Power

    Collecting more taxes than is absolutely necessary is legalized robbery.
    —President Calvin Coolidge

    Taxing beyond public safety diminishes the freedom of the person taxed.

    Medical Device Tax Destroys Jobs and Research

    To fund ObamaCare, a 2.3% tax on medical devices was included in the law. On January 1, 2013, this tax will be activated. The "medical device" tax exhibits an enormous impact on businesses, employees, medical research and patients. In short, taxes reduce the economic, creative and productive powers of the people directly taxed. Additionally, taxes reduce product advancement and choices for consumers – every American.

    The medical device tax is already destroying jobs. Lev Melinyshyn of the medical device maker Uresil in Skokie, Illinois explains why he laid off around 10% of his employees:

    "We had never laid off anybody," he added. "We bought the company in 2004, never had a layoff. In fact, even during the recession, we added jobs.... It wasn't until this tax hit us that we had to do it."

    Melinyshyn is also halting product development, which harms American consumers. "A lot of patients, I think, are not going to benefit from new technologies," he noted. "We've literally put all of our new product development on hold ... so we can afford to pay the stupid tax."

    Significantly and harmfully, the ObamaCare tax is taking money from private entrepreneurs that are providing and improving products for the benefit of consumers. Murray Rothbard, a libertarian economist of the Austrian School, explains:

    The productivity of the private sector does not stem from the fact that people are rushing around doing "something," anything, with their resources; it consists in the fact that they are using these resources to satisfy the needs and desires of the consumers. Businessmen and other producers direct their energies, on the free market, to producing those products that will be most rewarded by the consumers....

    Again, the ObamaCare tax takes from the productive private economy, which provides valuable goods to the American consumer. Now, because of the ObamaCare tax, people are unemployed and product development is stopped. Worse, the tax revenue fuels a very bureaucratic, inefficient and coercive government program - ObamaCare. Writing 50 years ago, Rothbard clearly understood the harm now being caused:

    … the public sector can only feed off the private sector; it necessarily lives parasitically upon the private economy. But this means that the productive resources of society — far from satisfying the wants of consumers — are now directed, by compulsion, away from these wants and needs. The consumers are deliberately thwarted, and the resources of the economy diverted from them to those activities desired by the parasitic bureaucracy and politicians. In many cases, the private consumers obtain nothing at all, except perhaps propaganda beamed to them at their own expense. In other cases, the consumers receive something far down on their list of priorities

    Sadly, the medical device tax and many more ObamaCare taxes are hurting or will hurt our economy, employment and medical advancement. So far, ObamaCare has not decreased the cost of medical care. As Rothbard noted, America has only received a lot of propaganda at our own expenses.