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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 4269  
Subject: Medical Device Tax Date: 10/3/2012 2:15 PM
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Here's an article on the new Obamacare tax on medical devices:

http://online.wsj.com/article/SB1000087239639044462010457801...


The new tax is 2.3% on TOTAL SALES. It's not a tax on profit but 2.3% on overall sales. So, the effective tax is much higher. Let's say the company has a 5% profit margin on it's medical devices. That results in an effective tax of 46% on profits. That's correct. Of course, that's absolutely huge.

As the article points out:

"Many U.S. device companies, in response, have already announced layoffs, canceled plans for domestic expansion and slashed research-and-development budgets. This month, Welch Allyn—a maker of stethoscopes and blood-pressure cuffs—announced that it will lay off 10% of its global workforce over the next three years, but all of the jobs being cut are in the U.S.


Thus, the new tax will lead to job losses in the medical device sector, decreased innovation and higher prices for needed medical devices.


Isn't "reform" wonderful?


dave
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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3928 of 4269
Subject: Re: Medical Device Tax Date: 10/3/2012 2:27 PM
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I should add that the article calculates that the 2.3% tax on sales would result in a 15% tax on the typical medical device company.

Of course, this is in addition to the normal 35% federal corporate income tax and state corporate taxes. With the added tax, the effective tax rate will be in excess of 50% in some states.


dave

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Author: fleg9bo Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3929 of 4269
Subject: Re: Medical Device Tax Date: 10/3/2012 2:58 PM
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More from the article:

A 2.3% tax on medical-device sales, not profits, was imposed under the theory that sales to medical-device companies would surge after patients newly insured by the Affordable Care Act poured into the system. What the industry lost in margins, it was supposed to make up in greater volume.

That calculation ignored the fact that the vast majority of medical-device consumers already are covered by Medicare, Medicaid or private insurance. So there will be little or no increase in sales volume to offset the added cost of $30 billion — according to the Congressional Budget Office — to the industry. This tax comes straight out of a company's bottom line. Because many devices are sold to hospitals, physicians and other providers through multiyear contracts, the prices are already locked in, so the tax cannot be passed on to the buyer.
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So the medical device industry faces a $30 billion haircut. But it's big corporations, so they deserve it. Right?

If Obama were deliberately trying to increase unemployment and worsen the health care system, what would he be doing differently? Exactly.

--fleg

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Author: erikinthered100 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 3930 of 4269
Subject: Re: Medical Device Tax Date: 10/3/2012 3:08 PM
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So the medical device industry faces a $30 billion haircut. But it's big corporations, so they deserve it. Right?

If Obama were deliberately trying to increase unemployment and worsen the health care system, what would he be doing differently? Exactly.

--fleg


Yes, it's pretty corrupt. Maybe he can use the money to bail out some more of his union buddies or some other buddies starting a solar company. Wait... he's already done that.

Robbing Peter to pay Paul.

It's good to be King.

dave

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