After maintaining control of the White House and US Senate, one would expect the Democrats to be flexing their muscles in every way possible, but it appears that there are some cracks in that plan.
Last week, eighteen Democrat Senators and Senator-elects sent a letter to Senate Majority Leader Harry Reid asking him to delay the medical device tax, set to take effect January 1, 2013. One of the key provisions of Obamacare, the medical device tax of 2.3% will be levied on the manufacturer of all medical devices used in the medical field, including examination gloves.
While 2.3% may not sound like a lot, it adds up to a great deal to many companies, especially when you considered other tax increases they are facing under Obamanomics. One company in Indiana, Zimmer Holdings, who manufactures hip replacement parts, has already given pink slips to 450 employees in an effort to offset the additional $60 million in taxes they are facing in 2013. Stryker Corp, a Michigan company that also manufactures hip replacement parts handed out pink slips to 5% of their workforce as they say they will be paying $100 million in taxes in 2013. Many experts believe that these layoffs are just the tip of the iceberg and that thousands more may result from the implementation of the medical device tax.
States such as Indiana, Michigan and Massachusetts have a number of companies that manufacture medical devices and it just so happens that they also have at least one Democratic senator. In Massachusetts alone there are over 400 medical device manufacturers and they are counting on Sen. John Kerry and newly elected Elizabeth Brown to help protect them from this business killing tax.
In their letter to Reid they stated:
“The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million high-skilled manufacturing jobs. … With this year quickly drawing to a close, the medical device industry has received little guidance about how to comply with the tax — causing significant uncertainty and confusion for businesses. We urge you to support delaying enactment of this provision in a fiscally responsible manner.”
I find it ironic that these Democratic Senators are realizing that increasing taxes on the businesses means fewer jobs in an already depressed job market. However, they fail to realize that the same thing will happen when they raise taxes on the wealthy, since many of them are the owners of businesses who employ millions of Americans. These wealthy people are going to scale back their businesses or raise prices to compensate for having to pay more in taxes.
An example is business tycoon Steve Wynn, who over the years has created 250,000 jobs in the state of Nevada. He has the opportunity to build a new hotel complex in Las Vegas that would create 10,000 direct new jobs and up to 25,000 indirect jobs, but he is holding back because of Obama and his anti-business mentality which includes taxing the rich.
Democrats only see the negative affect of the tax increases when it hurts their state and their chances of being re-elected. The medical device tax is just one of numerous taxes contained in Obamacare and I’m sure many of them will have the same negative impact on businesses, doctors, hospitals and the American people. Unless the medical device tax and others are stopped and repealed, the American economy is destined to spiral down the drain to recession and depression.