Killer 2.3% Tax on Sales of Medical Devices before Congress

This is another example of lame brain thinking. Medical devices are already under attack from the FDA as we discussed previously.  This tax rates up their with the punitive luxury tax.  Remember that one?  It effectively killed sales of high priced luxury purchases which correspondingly eliminated the normal tax base.  This will do the same.

Empty Headed Thinking

Here is how convoluted the thinking is.  Obama appoints a new FDA chief who has a negative attitude towards medical device companies and effectively stymies new product development. Did you know that a CEO of a medical device firm can be held criminally liable for the actions of an employee? Now, new products are being developed, produced and marketed outside the USA while the company waits years for FDA approvals.

Add to that, they want to levy a special punitive tax on medical device firms to help offset the costs of the FDA.  The same FDA that is shutting down innovation in the industry.

Major device firms are already preparing for massive layoffs as the industry gets hit with new rules, less communication, delays in approvals, unreasonable oversight, and this tax.  This tax breaks the industry back.  We are not talking outsource jobs as much as just flat eliminating them.

Today’s Posting on LinkedIn Medical Devices Group

Here is a comment posted on the Medical Devices Group on LinkedIn. I am one of those who made their living in the industry for over 25 years. I no longer pursue marketing consulting work in the industry because of the decline in innovation and start-ups.

“Subject: Don’t let the Senate outsource your job to China

The 2.3% medical device tax will hurt many members of our group. Badly.

Smaller meddevice companies will bankrupt. Suppliers will close. Recruiters and investors will abandon the industry. Well-paid employees will lose their jobs.

Our group has 107,000 members from every major medical device company, including 400 manufacturers that co-signed a July 2011 letter of petition to both Houses of Congress. The House of Representatives already has the votes. The Senate needs convincing.

If we all add our names to that petition against the tax at http://bit.ly/no2point3 , maybe we can help persuade the Senate to repeal it.

Will it turn the tide?

Who can say? But here’s a true story:

I asked a friend based in China to help me out (personally) and sign the petition. She would NOT sign it. Instead she said, “From a strategic point I guess I should be in favor of the tax as it might drive some business, jobs, and US dollars out of the USA, haha.”

She meant it as a joke. But I was not laughing.

By some estimates, the tax will offshore 43,000 jobs and cost $3.5 billion in lost wages.

Are you willing to stand up for your industry?

1. Sign the petition at http://bit.ly/no2point3 .

2. Forward this email to every medical device employee, recruiter, supplier, vendor, and family member who relies on American industry.

3. Update your personal LinkedIn profile with a link to http://bit.ly/no2point3 . Submit stories about this effort in other LinkedIn groups.

4. Share the link on Facebook, Twitter, and elsewhere. Embed a “No 2.3%” banner on your site. Change your avatar (as I have) – all these tools are available at http://bit.ly/no2point3 .

Good luck.

Joe Hage
Medical Devices Group Leader

P.S. I expect a huge spike in web traffic when this email hits. I think I’m prepared but in case the site is busy or down, please come back later!
Posted By Joe Hage”