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I don't really buy the argument that these medical device companies are laying off people because of this tax. It makes no sense, since their customers don't pay for the devices or the tax--insurance pays for it.

But this tax is huge. And it's 2.3% of sales, not profit.

The effect of the tax on earnings of U.S. companies is likely to be significant. In 2006, medical device manufacturers reported taxable income of $13.7 billion and paid $3.1 billion in corporate taxes. The United States already has one of the highest corporate income taxes in the world. The new 2.3% excise tax will roughly double their total tax bill and raise the average effective corporate tax rate to one of the highest effective tax rates faced by any industry in the world.

Sounds like a great way to bend the cost curve down, doesn't it? And with the device makers unable to pass the increased cost along to the consumer, there isn't much else they can do but try to lower expenses, including eliminating employees.

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