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In June of this year, the Supreme Court ruled that the massive healthcare overhaul forced on the American people by President Obama would indeed stand as constitutional, because it is recognized as a tax. Underneath the blanket assertion that Obamacare is one of the biggest tax increases in American history, is the realization that the law includes many other taxes beneath the surface. One such tax, the Medical Device Tax, is already costing vital jobs in an unstable economy.
Welch Allyn, a company that manufactures medical diagnostic equipment in central New York, announced yesterday that they would be laying off 275 employees, or roughly 10% of their workforce. One of the major reasons discussed for the layoffs was a proactive response to the Medical Device Tax mandated by the new healthcare law.
The Medical Device Tax is a 2.3% excise tax levied on manufacturers and importers of certain medical devices, and is scheduled to begin wreaking havoc on the medical industry, hospitals, doctors and patients, in 2013.
In an interview with the Syracuse Post-Standard, Steve Meyer, President and CEO at Welch Allyn, called the tax "onerous and impactful".
Meyer provided a basic mathematical model to highlight his point:
For example, a company that has $100 million in sales would pay $2.3 million in tax, Meyer explained. If that same company earns $10 million in profit that tax now represents a 23 percent dip in the bottom line, he said.
When bottom lines are effected, companies will necessarily adjust profit margins through other means - in this case, a staff restructuring.
An announcement such as this was forewarned by several medical companies last month, when they reported that "the surcharge would eat into their profitability, at the expense of their research and development budgets."
Welch Allyn officials themselves issued a warning about the effects of the new tax. In June, Eric Allyn, one of the company’s owners and a board member, said of the new tax “It’s not going to put us out of business, but it’s the most material speed bump that we’ve come across in at least a generation."
He added, “If another company in this area were being hit with a tax as big as that, it would be front-page news for a long time.”
The detrimental effects of the Medical Device Tax implemented by Obamacare are no longer speculation, they are all too real. Townhall's Katie Pavlich went so far as to call the Medical Device Tax a "death sentence for American medical innovation" and by extension, a death sentence for jobs.
275 people in central New York received that death sentence yesterday.
Senate candidate Wendy Long in New York's 20th congressional district stated that, "... the Medical Device Tax is just more living proof that (Obama's) economic policies are a disaster."
Meyer seemingly agreed saying, "The uncertainty surrounding the future of the Obama health care package is creating turmoil in the domestic market."
Creating turmoil in the market. Destroying American jobs.