The Hill

Device makers say tax will cost 43,000 U.S. jobs

By Sam Baker - 09/07/11 12:35 PM ET

The medical device industry says it could lose 10 percent of its U.S. workforce because of a tax created by healthcare reform.

The Advanced Medical Technology Association (AdvaMed) released a report Wednesday that says device makers might ship 43,000 jobs overseas once the tax takes effect in 2013.

AdvaMed released its report as Congress returned to Washington with a renewed focus on jobs. Leaving the device tax in place would not only inhibit job creation, but would lead to further job losses, the industry group said.

Healthcare reform imposed new taxes on several health industries, including a 2.3 percent sales tax on devices. AdvaMed consistently opposed the fee and has pressed for its repeal.

Wednesday’s report says the tax will double the total tax burden on device makers and “raise the average effective corporate income tax rate to one of the highest effective tax rates faced by any industry in the world.”

Diana Furchtgott-Roth, a senior fellow at the Hudson Institute, said device firms are already moving their operations to other countries and that the trend will accelerate if the device tax is left in place.

Companies that relocate overseas would still have to pay the 2.3 percent tax. Furchtgott-Roth said the firms would nevertheless make the move because they would face a lower overall tax rate.

Three bills to repeal the tax have been introduced in the House. The leading measure, sponsored by Rep. Erik Paulsen (R-Minn.), has 187 cosponsors.

AdvaMed officials told reporters Wednesday that they’re not aware of any immediate plans to move a repeal bill, but said it would be a logical fit for debates over job creation or tax reform.

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