What’s All This Federal Fuss Over An Obscure Medical Device Tax?

A pacemaker device that had been removed from a deceased patient. (Steven Fruitsmaak/Wikimedia Commons)

A pacemaker device that had been removed from a deceased patient. (Steven Fruitsmaak/Wikimedia Commons)

The medical device tax, an obscure component of health reform, is suddenly in the public eye after the House of Representatives chose to attach a repeal of the tax, along with a one-year delay of Obamacare, to a Senate budget resolution to fund the federal government. The move by the House sets up a showdown that may end in the federal government being shut down until a deal can be hammered out — something that hasn’t happened in nearly 20 years.

As lawmakers scramble in Washington, we turned to Brian Johnson, publisher and co-founder of MassDevice.com, an online business journal covering the medical device industry, to tell us what’s up with the tax and why it’s suddenly a hot-button political issue. MassDevice.com has been covering this issue for four years, speaking with lawmakers, medical device CEOs and lobbyists.

So Brian, to echo our headline, what’s all this fuss about the medical device tax?

The medical device tax is a 2.3% excise tax on every sale of a medical device in the United States, except for some consumer products like contact lenses and Band-aids, which are exempt.

The levy was conceived four years ago this month as a way to pay for the Affordable Care Act and has been in place since this January of this year. It’s estimated that the tax will generate about $30 billion in income for the federal government over the next ten years and, since they started making semi-monthly payments to the IRS this January, medical device companies have already paid more than $1 billion to the federal government under the tax, according to a recent report.

However, the tax also has powerful friends. In fact, it has the three most powerful friends you can get in Washington, D.C.

The tax is universally hated by the medical device industry, which has been feverishly lobbying lawmakers to get the tax knocked out, delayed or repealed outright for the better part of four years now.

The tax is also generally unpopular with lawmakers on both sides of the aisle in Washington and has actually already been repealed once by the House of Representatives as a stand-alone bill in June of 2012 by a vote of 270-146, as one of the 44 separate bills the House has passed repealing all of, or parts of Obamacare. The Senate also voted in favor of repealing the medical device tax, 79-20. However, that was a non-binding resolution, which amounts only to a symbolic show of support in the Upper Chamber.

However, the tax also has powerful friends. In fact, it has the three most powerful friends you can get in Washington, D.C. Sen. Max Baucus (D-Mont.) chairman of the Senate Finance Committee, is the father of the tax, having been in on creating the ACA in 2009; his colleague, Senate Majority Leader Harry Reid (D-NV), has no interest in bringing a repeal bill to a vote because he helped broker a deal to cut the tax in half in 2009. And the biggest backer of the tax, President Barack Obama, has promised to veto any bill containing a repeal of the medical device tax.

So is this really worth shutting the federal government down over? Don’t these guys make billions of dollars a year? Why can’t they just pass that 2.3% on to their customers?

Let me try and answer that by explaining why the medical device industry so hates this tax.

First, it’s a tax on sales, so even companies that are losing money have to pay it. This means the tax disproportionately harms young, innovative start up companies that are building the medical technologies of the future. It takes a ton of money to bring a new medical device to market, between the regulatory hurdles at FDA and the Centers for Medicaid and Medicare Service, legal bills from protecting patents and intellectual property, manufacturing costs and challenges of building a highly specialized sales forces. Medical device companies generally don’t achieve profitability until they hit at least the $100 million in sales mark (if they’re lucky).

Second, the tax is costing the industry thousands of jobs. In 2012, publicly traded medical device companies cut 10,000 jobs, in part, to brace for the impact of the tax, although it’s impossible to determine how much the tax actually added to those job loss numbers. Still, the amount of money that companies are paying is substantial. Massachusetts’ own Boston Scientific has kicked $35 million back to the feds in the first half of the year; Mansfield, Mass.-based medical device giant Covidien has dropped $30 million; and every company has felt some pain in the wallet investing in the IT systems and tax experts necessary to comply with paying a tax on every single product you sell every two weeks.

Third, the hospital industry has made it nearly impossible to pass the tax along to them. Groups representing the hospital industry asked the IRS to write into its regulations that device companies couldn’t pass on the tax to them. When that didn’t happen, the hospital industry created a public shaming campaign called “Medical Device Tax Watch,” a website that names any company that is passing along the tax to hospitals. The campaign is funded by the Healthcare Supply Organization, a group that represents nearly all of the hospital purchasing groups in the country, so it has been effective in keeping most medical device companies from trying to pass the buck.

Fourth, the medical device industry is generally offended that they’ve been singled out to pay for a health-care reform bill they don’t think they’ll get anything out of. The common argument among advocates of the tax has been that associated healthcare industries will see a massive boom in customers because of new enrollees into the health-care system. However, medical device makers argue that the new enrollees in health insurance plans will be young and not in need of the technology they create, such as cardiac stents, hip and knee implants and surgical devices that the industry primarily creates.

Really, they’re saying they won’t see any new business out of Obamacare? How can that be?

Pulse oximeter (Wikimedia Commons)

Pulse oximeter (Wikimedia Commons)

Several companies have studied their business results in Massachusetts, which is the model for the ACA and one of the only universally insured populations in the U.S., and swear they see no uptick in business.

One of the few companies to actually make its study public, Masimo, a patient monitoring company, which makes pulse oximeters (those things they put on your finger tip when you go in for surgery that measure the amount of oxygen in your blood), reported that their sales actually dropped in Massachusetts, despite a 7% influx of newly insured patients.

Unfortunately, there haven’t been enough independent studies on the subject to refute the notion that there won’t be any increase in sales for the medical device industry. However, it certainly won’t see the kind of business uptick that pharmaceutical and health insurance companies will from the new influx of patients into the system.

How did repealing the tax become a part of this whole spending debate?

With the exception of some mixed messaging in the early days of the medical device tax, the medical device industry has really been in lock-step with its push to repeal the medical device tax outright.

AdvaMed, the chief lobbying organization for the medical device industry in Washington, has steadily increased its outreach to lawmakers on The Hill and has been well-positioned to have the ear of the GOP power base. Brett Loper, who used to run government policy at AdvaMed, left the association to become a senior policy staffer in House Speaker John Boehner’s office for a couple years before moving on to American Express.

In addition, the industry has worked along with Rep. Erik Paulsen (R-Minn.) and Sen. Amy Klobuchar (D-Minn.) to help spread the work of the medical device industry in both houses of congress. Former Massachusetts senator Scott Brown was also an outspoken advocate for the industry in repealing the tax before he lost his seat to Sen. Elizabeth Warren (who also supports repealing the tax). Over time, the industry and its friends have built a solid core of support. Once they had the votes in place, AdvaMed has essentially been looking for a larger Senate bill to attach the repeal amendment onto.

Last week, AdvaMed hosted about 2,100 medical device executives in Washington, D.C. for its annual conference, and while leaders were skeptical that the device tax could be attached to the continuing resolution debate, they were hopeful they would get a chance during the upcoming debt limit talks. In addition, AdvaMed began buying large chunks of advertising in media outlets like Politico, which is widely read on Capitol Hill.

Apparently, those efforts were successful, and something accelerated those plans and the tax leapfrogged into the big time.

Isn’t the medical device industry a big part of the Massachusetts economy?

Yes, the Commonwealth represents the second or third largest medical device cluster in the U.S., depending on how you measure it. Companies like Boston Scientific, Covidien, Phillips, Smith & Nephew and Zoll Medical employ tens of thousands of people in the state and the total economic output of the industry accounts for about 2.5% of the state’s gross domestic product.

Massachusetts is also home to hundreds of small, start up companies developing cutting edge medical devices.

So Brian, after covering the issue for four years are you surprised to see it suddenly thrust into the national spotlight?

Yes, at MassDevice we’ve been on this issue for four full years now and everyone on the staff has become an expert on the subject and, honestly, we’re all probably pretty sick of writing about it. However, it’s one of those issues that people in the industry never seem to get sick of talking about.

It’s also an issue that gives most people outside of the industry pause because it is, after all, kind of a weird concept, excise taxes are often associated with things like gasoline, diesel fuel, liquor, wine, cigarettes and airline tickets — not life saving medical equipment. I also think the jobs argument has always been a winning argument against the tax.

However, it’s still a strange thing to see something like the medical device tax become a part of this much larger drama in Washington, D.C. There were times on Saturday night — sitting on my couch watching CSpan at 11 o’clock, counting votes and drinking bourbon — where I actually had to pinch myself that the federal Government could end up getting shut down over the medical device tax. Part of me was a little overcome with nostalgia thinking about the hundreds of conversations I’ve had with CEO’s, congressmen and lobbyists over this issue. I truly feel like I had a front row seat for all of this drama.

The other part of me was just sad that I had nothing better to do than sit on my couch watching CSpan at midnight on a Saturday night.

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  • brutallyfrank

    This is a tax on IMPORTS. It makes U.S. manufactured products more competitive. This is good for american manufacturing. if congress doesn’t stand up and represent the american worker, all is lost.

    • ssejhill

      Sorry Frank. The law doesn’t exclusively tax importers of medical devices. This is a tax on all medical device sales at the manufacturing level. According to the IRS “The tax is imposed upon the sale of a taxable medical device by the manufacturer or importer, the manufacturer or importer is responsible for reporting and paying the tax.”

      • brutallyfrank

        and this is a good thing because it protects our u.s. manufactured products by raising the price slightly on the imported good making a u.s. made product more competitive. plus, it brings into the treasury money that would otherwise be sucked out of the united states and land — you got it, overseas (never to return again)… so explain to the american people why they don’t want to keep this tax in place to protect american jobs AND bring monies back to the treasury to help offset the debt/deficit. ssejhill, think you need to zen in on this stuff for a little while longer. check out http://www.opensecrets.org see the forms General Electric submitted to lobby twice to repeal this law. do you know that GE doesn’t pay (or barely pays) any federal tax in the u.s. I think you need to do some more research and see who’s covering your six, and who is trying to stick foreign objects in it.

        • ssejhill

          Frank, I’m not saying this law needs to be repealed or kept. I’m just pointing out that there is no benefit to a US manufacturer product. This tax targets imports from foreign countries AND it targets US manufactured goods. The tax is the same, whether the medical device is imported or made here IN the US.

          You made the statement that this is a tax on imports, and that it makes US made goods more competitive. I’m telling you that you misread the law. It taxes US made goods at the same 2.3% tax rate as imported goods. There is no benefit to a US manufactured product, nor is there any benefit to importing that same good. The tax is the same either way.

      • John Eckberg

        We compete in a global marketplace and U.S. hospitals are increasingly seeking lowest price, regardless of where the device is manufactured. Our competition may be based in Switzerland (3% tax rate applied to earnings not sales), manufacture in Costa Rica (0%)and dump products on Group Purchasing Organizations in Florida (assume the 2.3 percent tax rate is a mere 10% tax equivalence against earnings or profits, although for some it’s much much worse). So that product has a total tax rate of 13%. Compare that to the same product made in the U.S. (30% tax rate plus 10% equivalence from this tax and 5% local tax rate) for a total tax rate of 45% and a huge price disadvantage. A 2.3 percent tax on gross sales is a huge grab.

  • The Gabster

    I am a consumer and I have to pay taxes on everything I purchase with the exception of food. Why should companies be any different .When Reagan eliminated tax credit for credit card purchases Republicans were not outraged. You see people as long as government policy effects the poor and middle class they have no problem passing these laws. Wake up America if you are poor or middle class Republicans DONT CARE ABOUT You!

  • alex

    I support the health care law but this tax on revenue will definately hurt innovation. I started a medical device company and we have grown very rapidly. from8 to 130 employees in 3 years. We have millions in revenue but we are borrowing money to keep up with the cash demands of the business. Hospitals don’t pay on time and we have to buy for the future. Our paper profit is less than the annual cost of the device tax so its actually a 100% tax on profit but worse is we actually are borrowing money just to pay the tax. This is definately hurting our growth and could have destroyed me two years ago when we had no borrowing capacity. This tax is not about the big boys its about the small innovative companies that will suffer. We cannot pass the tax forward. Taxing revenue does not make sense in any economy.

  • Judi Youdelis Hinton

    Tax on Medical Devices Should Not Be Repealed
    Industry Lobbyists Distort Tax’s Impact
    PDF of this report (6pp.)
    Excise Tax on Medical Devices Should Not Be Repealed — Center on Budget and Policy Prioritieswww.cbpp.org
    Non-partisan research and policy institute working on federal and state fiscal policies and public programs that affect low- and moderate-income Americans

    • http://www.dailykos.com/user/shpilk shpilk

      Judi, you are awesome.

      Keep up the good work.

    • John Eckberg

      https://www.batchgeo.com/map/8e2bca544a3de76aff8664789bd0443d

      This map includes a roster of individuals who work (probably worked in some cases) at listed companies and opposed the medical device tax by signing a cyber-petition at http://www.no2point3.com/ to let lawmakers know the repeal of this tax was terribly important. If you want to know why more than 3 of 5 Democrat Senators and 4 of 5 U.S. Senators want this tax repealed, including both Senators from progressive states of Oregon, Washington, Colorado, Rhode Island and elsewhere.

      Cut and paste this map into your browser to see the same information, although it’s only about 7,500 points and today more than 11,000 have signed the petition. When you search by city, click on the pinpoint near the city’s pinpoint after the map zooms to get a star burst array of others from that Zip Code who want this tax repealed. Try Warsaw, IN, San Diego, CA and watch what happens when you click the final pinpoint placeholder that remains. Be patient, it takes a full two minutes to load:

      https://www.batchgeo.com/map/kml/8e2bca544a3de76aff8664789bd0443d

      I am the media relations director at Cook Medical.

  • Judi Youdelis Hinton

    Lawmakers initially considered a higher tax, but the medical device industry succeeded during the health reform debate in halving the amount of revenue that a fee or tax on devices would raise. Since the excise tax was enacted, lobbyists for the industry have been pressing for its delay or repeal. Last year the House passed H.R. 436, which would have repealed the tax, and bills to repeal the tax have been introduced in both the House and Senate this year.
    Medical devices encompass an extremely wide range of products, such as surgical gloves, dental instruments, coronary stents, artificial knees and hips, defibrillators, cardiac pacemakers, irradiation equipment, and advanced imaging technology. The U.S. medical device industry has estimated total sales of $106 billion to $116 billion a year.[8] A few large firms account for the lion’s share of this revenue. For example, Johnson and Johnson’s worldwide sales of medical devices and diagnostics totaled $27 billion in 2012; the firm had total sales (on both medical devices and other products) of $67 billion, on which it earned profits of nearly $11 billion.[9] Medtronic had $16 billion in sales and profits of nearly $4 billion in its 2012 fiscal year.[10] One trade group has estimated that the ten largest medical device makers will account for 86 percent of the sales of covered medical devices and hence pay 86 percent of the receipts from the excise tax.[11]

    • John Eckberg

      Lawmakers considered the higher tax, about five percent, until a light bulb went off in some Senate staffer’s head. After all, the average profit margin for the average medical device company, according to the Medical Device Manufacturers Association, is between 3 and 6 percent. So the first version of this measure would have claimed just about all the profits of the average American medical device company. No wonder they cut it in half, hoping that companies could still make ends meet with only half their profit now lost to a tax.

      • Eric Bozinny

        You cite the industry’s own trade group? According to Fortune, medical devices are the fourth most profitable industry with a profit of 16% of revenues.

        • John Eckberg

          Fortune? Is anybody left at that magazine? And you think whoever is left is credible? An Ernst & Young survey 2009 showed that the medical device industry makes a profit of 3.4 percent on sales. So this tax of 2.3% was projected to consume more than 65 percent of a typical company’s profits. Apparently that was high because for the average device company, according to a trade association you discount, this tax raises federal tax bills by 30 percent. But it’s far worse for some. I wrote to an entrepreneur in Florida on Friday who said the imposition of this tax claimed all the profits and more posted by his company so now he has to take a loan out to pay his taxes. He was an INC Magazine top 500 company with 1,200% growth year over year. His products are in 1,000 hospitals.

  • Judi Youdelis Hinton

    Congress carefully designed the ACA so that it will not add to the budget deficit. To help pay for the expansion of health coverage to 27 million uninsured Americans, the ACA either reduces Medicare payments or increases taxes for a wide range of industries that will benefit from health reform, including hospitals, home health agencies, clinical laboratories, health insurance providers, drug companies, and manufacturers of medical devices.

    • John Eckberg

      Of course hospitals were in favor of this measure as it took the “bad pays” or the “non-pays” off their books. Of course Big Pharma was in favor of the ACA because there will be 27 million newly covered patients, who are likely to need six prescriptions each. This particular tax was not designed to pay for the expansion of health coverage. If the ACA costs $1 trillion or more, the $29 billion projected to be raised by this tax over the next 10 years is pretty much a rounding error – less than 3 percent. But for the 15,000+ companies in this space, it takes total tax rates to 50 percent, 60 percent, even 100 percent of 2012 earnings for those companies with thin profit margins. This tax is a job-killer

      • John Eckberg

        And I am the media relations director at Cook Medical, the nation’s largest family owned medical device company

        • Jeff

          You call 3 percent a minor rounding error when it applies to the funding of ACA, but you call a 2.3% tax some massive obstacle that the medical device industry can’t possibly survive. How stupid do you think the American people really are?

          • John Eckberg

            Hello Jeff, You are comparing apples to zebras. You need to understand the basics of accounting: a top line tax is not a tax on earnings or what used to be known as Earnings Before Interest, Taxes, Depreciation and Amortization, which is commonly known as EBITDA. When this top line tax is floated down the balance sheet to EBITDA where taxes enter into a company’s ledger, it takes the cumulative tax rate for some companies to well above 50 percent. That is, every dollar earned has another dollar going to federal authorities. And this is happening in a marketplace that is global. Our competition may be based in Switzerland (3% tax rate applied to earnings not sales), manufacture in Costa Rica (0%)and dump products on Group Purchasing Organizations in Florida (assume the 2.3 percent tax rate is a mere 10% tax equivalence against earnings or profits, although for some it’s much much worse). So that product has a total tax rate of 13%. Compare that to the same product made in the U.S. (30% tax rate plus 10% equivalence from this tax and 5% local tax rate) for a total tax rate of 45% and a huge price disadvantage. A 2.3 percent tax on gross sales is a huge grab. I am the media relations director at Cook Medical. And, in conclusion, I think the American people are really smart and, ultimately, that’s why this tax is going to be repealed.

          • Eric Bozinny

            You think the American people are really smart? Boy, you’re deluded.

          • brutallyfrank

            if the american people were really smart they would keep the tax in place. that would place more of the burden on the corporation and less of a tax burden on the average worker, the middle class taxpayer. go to the bea.gov website, you can download tax receipt data from 1980 to today… you can see how corporations now pay less than 25% of all the tax receipts collected by the IRS and the individual wage earners are paying the majority of the remainder…. this was not always the case… corporations have been lobbying congress so frequently like in this case, all their jobs went overseas, all their tax dollars have gone overseas, and they are left holding the bill for the rest. ENOUGH IS ENOUGH.

          • John Eckberg

            Keeping this tax in place will only drive companies and jobs to low tax locations like Costa Rica, Ireland and Eastern Europe. It has already happened on a massive scale. Search Volcano Medical and Costa Rica. A $40 million factory. We compete in a global arena and high tax rates bring a burden of joblessness to many workers when companies seek foreign shores and GPOs and others gladly pay the lower prices.

            Without a doubt there is a lot of truth in what you say about corporate tax rates. But with this tax, corporate tax rates explode, particularly for low margin products and companies that have thin profit margins. Do you really want companies in our nation’s most innovative industry to have tax rates exceeding 50 percent of every dollar earned? I know of a company in Florida, New Wave Surgical that is really in a bind. Owner Alex Gomez developed a small device to replace the buckets of hot water traditionally used to defog scopes during laparoscopic surgery. In three years his company has logged a 1,904% growth trajectory and in 2012 posted $12.4 million in revenue. Then came the 2.3% tax on medical device sales in 2013. As a result, Mr. Gomez has had to take out a loan to pay the tax! A loan to pay a tax! “It’s insane,” he says.

          • ssejhill

            “Keeping this tax in place will only drive companies and jobs to low tax locations like Costa Rica, Ireland and Eastern Europe.”

            This tax is also applicable to importers of these medical devices as well. Whether they make the device here in the US or over in Eastern Europe, the IRS will still be looking for that 2.3% excise tax. If a manufacturer moves it will be for some reason other than this tax, right?

            According to the IRS “[T]he tax is imposed upon the sale of a taxable medical device by the manufacturer or importer, the manufacturer or importer is responsible for reporting and paying the tax.”

          • John Eckberg

            It’s not the tax alone that is driving companies like Volcano to build $40 million plants in tax-free zones in Costa Rica. That tax is just the log that breaks the camel’s back. Here’s why…a catheter made in Costa Rican enterprise zone: Zero tax plus the 2.3 percent tax when sold into the U.S., which is equivalent to a 10% or worse tax on earnings but call it 10 % for the sake of this exchange so that product has a 10% total tax rate.

            Compare to catheter made in Spencer, IN: 30% U.S. corporate tax (we get 4 points of tax credit for creating new manufacturing jobs and for having R&D hires) plus the 2.3% tax or 10% equivalence when applied to earnings plus 5% local taxes = 45% tax rate.

            Where would you build your next plant? I am John Eckberg the media relations director of Cook Medical…

          • ssejhill

            So your real issue is with the overall US corporate tax structure, not necessarily this one tax, since this one tax treats a US made product the same as an imported product. I can understand your complaint about the entire US tax code. I’m just not sure that you can justify your arguments here on this one tax that it is driving US manufacturers to build elsewhere. The entirety of US tax codes may by doing just that, however that is a separate issue.

            Would your opinion on the medical device tax be different if it had been phased in over a number of years? I know one of your previous arguments was that the 2.3% tax basically eats up most if not all of the profit margin of smaller device manufacturers. And since you contract to sell these devices to hospitals and the like at a set price for a period of 3-5 years you can’t work the tax into a new price until you re-negotiate your contracts. Would this tax have been better if you knew that 3 years from now it would be, let us say 1%, and then go up to 2.3% in 5 years? That way you could build the tax into your price structure while still maintaining your profit margin.

          • John Eckberg

            Yes to U.S. tax structure. It needs to be changed so foreign firms that manufacture do not have an immense price advantage here in the U.S. because of their lower tax base. No to most of your other questions because taxes on revenues are dumb but thanks for asking them. It’s a fact that we are not getting millions of new customers (Roth Capital study and common sense). It’s a fact that a tax on revenues renders EBITDA obsolete for this sector, and now, in this space, companies are also being taxed on revenues that are directed toward wages but taxed before those wages are even paid. That’s a disaster. The company I work for is taxed on revenues that are then used to pay my salary.

            Also, the tax must be paid when a sale is booked, not when a customer pays. So if a client firm decides to play the CFO game and hold payments for 90 days, well, the manufacturer that has to pay the tax has to pay it within two weeks of the booked sale. So a tax is paid on revenues that have not even been received and may not be received for months.

            Keep in mind, too, that medical device development has been the salvation of healthcare. Our prices have held steady at about 5% of the cost of healthcare for 20 years. Some say that we are reliant on Medicare and Medicaid reimbursements. But that’s not true. The government cuts checks to hospitals, physician groups, etc. but not to device companies. We are simply the sitting duck for liberal think tankers who dream up these whacky but all too real taxes.

          • John Eckberg

            And if you doubt that this tax has led companies to seek near shore opportunities, google Volcano and Medical and Costa and Rica to read a story about their new $40 million factory.

          • ssejhill

            I agree that US tax code structure is in serious need of change.

            You do realize that taxes on revenues have existed in other industries for centuries, right? Fuel, cigarettes, liquor, airline tickets, tires, certain classes of vehicles have had to deal with these same issues for very long periods of time. The industry may not like them but the cost of the tax was quickly built into the price. You don’t hear much complaint from them anymore about the taxes. I think that the medical device excise tax could turn out the same within 5-10 years, if it remains on the books.

            The only issue I have with the medical device excise tax is that excise taxes are typically placed on products that either result in damage to individuals (cigarettes, liquor, …) or the environment (trucks, gasoline, airline tickets, …). The medical device excise tax targets products which help people stay healthy or diagnose problems so that they can be corrected.

            I’m on the fence on the excise tax, perhaps leaning more towards repeal, but for a completely different reason than you. Your arguments specifically against the excise tax I find tenuous. Your arguments against the tax code in general are very real and that is something that I hope Congress does do something about, eventually.

          • John Eckberg

            Appreciate your thoughtful reply. Those other excise tax examples are on end users – not manufacturers. This is uncharted waters for the tax code. I know of a manufacturer in Florida whose company has 1,900% growth curve, revenues of $12 million, was launched with a second mortgage on his mother’s house and today he’s had to take out a loan to pay this tax. These are not specious or obscure arguments (nor are they tenuous). This tax is draining the equivalent of an $80,000 a year job from a company in this space – each and every 20 minutes. Ask any 2013 medical engineering graduate how easy it is to get a job today…

          • ssejhill

            Not all excise taxes are on endusers. Many are on the manufacturing level. The coal excise tax … is paid by the owner of the mine or the mining company bringing it to the surface (whoever sells it). The gaz guzzler tax is on the manufacturer or the importer upon title transfer. Title is then held by the distributor or dealer. Ford, GM or Toyota then is require to pay that tax. The tax may appear on the window of the vehicle but it is already built into the price. Actually I can’t think of any excise taxes that are paid by the enduser. Every one that I know of is paid either by the manufacturer, importer or a distributor.

            Your other point (2nd mortgages and difficulty finding a job for medical engineering graduates) is sad but irrelevant to this tax. Those instances and instances just like them happen in every industry. Startups are difficult to make profitable regardless of growth or revenue. How long did it take facebook to start making a profit? They had huge losses to start out. If the excise tax stays on the books eventually it will be built into the cost of these devices and it won’t be the drain it is right now. Short term this tax is bad for medical device manufacturers. Long term it will have almost no effect.

          • John Eckberg

            Clearly I have a pretty big gap in my knowledge of where, how and who of excise taxes. What I know is this and it leads me to believe that you couldn’t be more wrong about long-term impact: this top line tax when applied to earnings or what used to be known as EBITDA will be devastating for start-ups and for mature companies as well because it takes total tax rates on average to well above 40 percent. For some companies, executives have told me, it takes rates to 60 percent to 80 percent, and, of course, it claims all of the profits for those firms with thin margins. Foes from Costa Rica are paying 10 percent tax rates, if that. A few years of those high U.S. tax rates crushing free cash flow, a few years of competing firms manufacturing elsewhere and having a large price advantage over homegrown firms and pretty soon Fred the company owner is going to cash out while there is still some value left in his company. This tax guarantees a blue light special on medical device firms in the months and years to come. Some might call that inevitable consolidation. But really it’s consolidation due to unwarranted taxes. Even today as I type this and since you wrote your last message, the equivalent of three $80,000 a year jobs vanished from the balance sheet of some company in this industry because of this tax.

          • ssejhill

            Tobacco companies, oil companies are some of the most profitable companies in the world. They have excise taxes at the manufacturing level. You build the excise tax into the price of the commodity over the long term and it has NO EFFECT whatsoever on your profitability. This is basic economics. If a company fails after this tax has been established its because of something else the company has done or fails to do.

            Again you keep bringing up Costa Rica which has no relevance to the discussion for or against this tax. A medical device made in Costa Rica and sold in the US will have the same 2.3% tax attached to it. Yes, their corporate tax structure may be more beneficial for setting up a manufacturing facility there (along with much less expensive labor costs) but that is a completely separate issue.

            The talking points that the medical device industry has been focusing are not the right ones to use to argue against this excise tax.

            And please stop with the “$80,000 a year jobs vanished from the balance sheet of some company in this industry because of this tax.” Enough executives from the medical device manufacturing industry have stated this excise tax will NOT stop them from hiring and expanding their business if growth is needed. That is a talking point that has been brought up by lobbyists and it has been proven to be false.

          • John Eckberg

            It’s a tax. Taxes have consequences. Four of five Senators want this tax repealed. Two of three Democrat Senators want this tax repealed. It’s the best economic development policy that Ireland could ever have wished for. No executive, who doesn’t hope to sell reimbursed products under the ACA, has come out and said this tax will help them hire and expand. Your saying so doesn’t make it true. This is a tipping point tax that is driving companies to Costa Rica, Ireland, China and elsewhere and it’s a tax that brings an advantage to products made there because those products can be marketed at a price that is far less costly than the same product in the U.S. No effect on profitability? It’s consuming 60 percent of the profit of many device companies, study after study has shown. Again, your using all caps and saying something isn’t true doesn’t mean it’s not true. Total tax bills for products made in Costa Rica, even though those companies will have to pay this tax, brings an immense advantage because U.S. corporate tax rates, which includes this tax, are so high. This is becoming a tedious argument of insidious intent with you repeating falsehoods.

          • ssejhill

            Taxes do have consequences but you are elevating this tax to be a job killer and reason for a company to outsource. It won’t happen.

            re: Executives speaking about the excise tax affect

            The industry’s lobbying campaign against the medical device tax is based on misinformation and exaggeration, as a number of industry executives and analysts confirm. For example, Martin Rothenberg, head of a device manufacturer in upstate New York, calls claims that the tax would cause layoffs and outsourcing “nonsense.” The tax, he writes, will add little to the price of a new device that his firm is developing. “If our new device proves effective and we market it effectively, this small increase in cost will have zero effect on sales. It would surely not lead us to lay off employees or shift to overseas production.” Michael Boyle, founder of a Massachusetts firm that makes diagnostic equipment, insists that the device tax is “not a job killer. It would never stop a responsible manager from hiring people when it’s time to grow the business.

            re: Tipping point tax

            If a manufacturer sets up their facility in Costa Rica, Ireland or elsewhere they still have to deal with this excise tax if they are going to sell the device in the US. They don’t avoid this tax by going somewhere else. They may avoid other taxes but they aren’t moving because of this one. You are trying to argue that the US corporate tax structure is onerous on companies so this tax should be repealed even though this one tax treats a Costa Rican product and a US made product the same and they get taxed at the same rate. You want to move your company to Costa Rica, go ahead. But you don’t do it to avoid this tax. You do it to avoid the United States’ higher corporate tax rates and more expensive labor.

            As I’ve said previously I mostly agree that this excise tax is probably not the appropriate way to raise revenues to fund the ACA, but I can’t agree with any of your points or arguments, especially since most are based on your dislike of the US corporate tax structure and not on this specific tax.

            And I agree that this discussion is not going to convince you of my points nor have I been swayed by any of your repeated falsehoods. Good luck with your business, though. Cook Medical, and companies like it, are an important piece for the healthcare industry in the US and their work is appreciated.

          • John Eckberg

            Repeated falsehoods? Frankly, you are the one trotting out half-truths and deceptive facts. You find two executives, who are probably trying to sell products that are not now reimbursable but will be under the ACA, and suggest they speak for this industry? I can find 30 CEOs to counter that those pair of apologists want the ACA because they will sell more products.

            This tax is crushing innovation and therefore harming patients. It is leading multinational companies to locate new factories in Ireland, Costa Rica and other low-tax nations in an attempt to lower costs. It is forcing firms to make Hobson’s Choices: do we cut R&D, curtail capital expenditures for new plants here at home or lay off workers? It’s a mess and you know it. Thanks, though, for noting that Cook plays an important role in the U.S. healthcare industry.

          • John Eckberg

            Tell those hundreds of employees laid off in Austin, Oregon, North Carolina, Michigan, New York and many other states that this tax has had almost no effect. More than 10,000 lay-offs to date. And the jobs still exist. It’s just that they exist in Costa Rica, Ireland, China and Poland. Why don’t you show up at a kitchen table and look those newly laid off husbands and wives in the eye and and explain how this is a small even inconsequential tax.

            This tax is draining from the balance sheet of a company in this industry the equivalent of $50,000 a year job that pays $33,000 a year in benefits each and every 20 minutes. It’s worth repeating – each and every 20 minutes. And you have the temerity to suggest that job loss is irrelevant? At Cook Medical, the cash equivalent of that salary disappears every other day. For somebody who seems to be fairly educated and not dumb, your arrogance and ignorance of the harm from this tax is nothing short of astonishing.

          • Rich

            Congressmen and Senators answer is – You should retrain to be a plumber, electrician or better yet a politician and get those lazy and corrupt politicans out of office – or start a new initiative to outsource the politicians jobs.

          • John Eckberg

            You imply that this tax is benign. I’d urge you to seek out any of the more than 10,000 who’ve lost jobs in this space in the last two years and ask them if the harm from this tax was negligible. I think we know what their answer would be. As a matter of fact, let me get you started on that task. Go ahead and reach out to Edgar Manosalva at email: manoseg1@yahoo.com. He’s an unemployed Medical Device Design Engineer with over 20 years experience developing medical devices. This is what he’ll tell you: “I have been largely unemployed over the last year, the only substantial work I’ve done this year is to help shut down facilities. I am attempting to go out on my own but it requires an investment and that is going to be difficult. The job market is too competitive for me to go into other fields (i.e. automotive) which may be doing well.”

            Here are some other folks who can talk about the “benign” nature of this tax: Micah Stott email: micah.stott@gmail.com. He used to work for Acclarent (Johnson & Johnson) as a Market Development Specialist. This is what he’ll tell you: “Army Veteran, Bronze Star recipient, changed careers to medical device and was laid off 8 months into career because positions were eliminated to try to remain profitable. Moved to Phoenix for this job, three children and wife is 9 months pregnant with fourth child. Trying to find work in this economy but other companies also laid off employees so there are less positions available”

            Or maybe Dr. Stuart Taylor at stuart.r.taylor@gmail.com can bring you some insight. “I just acquired a new job after a few months of having been laid off by a company that will be severely impacted by this onerous and punitive 2.3% medical device tax. Politicians who passed this stupid tax just don’t understand economics, health care, or the medical device industry, or in general what drives and promotes cutting-edge innovation, research, and advances in medicine. This punishes achievement and forces additional scrutiny on the bottom-line for companies, which hurts everyone.”

  • Judi Youdelis Hinton

    The industry’s lobbying campaign against the medical device tax is based on misinformation and exaggeration, as a number of industry executives and analysts confirm. For example, Martin Rothenberg, head of a device manufacturer in upstate New York, calls claims that the tax would cause layoffs and outsourcing “nonsense.” The tax, he writes, will add little to the price of a new device that his firm is developing. “If our new device proves effective and we market it effectively, this small increase in cost will have zero effect on sales. It would surely not lead us to lay off employees or shift to overseas production.”[2] Michael Boyle, founder of a Massachusetts firm that makes diagnostic equipment, insists that the device tax is “not a job killer. It would never stop a responsible manager from hiring people when it’s time to grow the business.”[3]

  • Judi Youdelis Hinton

    The Joint Committee on Taxation estimates that repealing the excise tax would cost $29 billion over the 2013-2022 period.[1] Repealing the tax would undercut health reform in at least two ways. Pay-as-you-go procedures would require Congress to offset the cost of repeal by increasing other taxes or reducing spending; one likely target would be the provisions of the Affordable Care Act (ACA) that expand health coverage to 27 million more Americans. Also, repealing the tax would encourage efforts to repeal other revenue-raising provisions of the ACA, which in turn would either require still more painful offsets or increase the budget deficit (if Congress failed to offset the cost).

    • John Eckberg

      Just because 27 million more Americans will be covered by insurance does not mean companies are getting millions of new patients. Those previously uninsured patients skew much younger than the population that uses implantable medical devices. And if somebody gets in a car wreck and needs a drainage catheter, no EMT fishes through pockets and purses today to find that insurance card. The catheter gets placed. Emergency medical treatment can’t be denied. There will be no flood of new patients and, in fact, based on the Massachusetts experience as the story details and a recent Roth Capital study, sales revenues actually shrunk in Massachusetts.

      • John Eckberg

        Also, lawmakers didn’t care about a ‘Pay-for’ when they repealed the 1099 reporting requirement shortly after the ACA was approved.

  • Judi Youdelis Hinton

    The tax will have little effect on innovation in the medical device industry. To the contrary, health reform may well spur medical device innovation by promoting more cost-effective ways of delivering care.

    • John Eckberg

      Device companies have no magic bucket of money to pay this extraordinary tax. Taxes always have consequences, particularly new confiscatory taxes like a tax on sales. So, companies will do one of three things: eliminate capital spending which is what Cook Medical did when it mothballed plans for five new factories; reduce spending on research and development thereby shrinking the pool of potential new products for patients; lay off employees and shift work to factories in low-tax nations because a lower base corporate tax brings a margin of relief when the product finally enters the U.S. and the execise tax has to be paid.

  • Judi Youdelis Hinton

    The tax will not cause manufacturers to shift production overseas. The tax applies equally to imported and domestically produced devices, and devices produced in the United States for export are tax-exempt.

    • John Eckberg

      Of course companies have and will continue to shift work to low tax nations. A recent story details that in November 2012, for instance, Volcano built a multi-million factory in Costa Rica and will sell back into the U.S. the products that are made there. That’s just one example. Other major companies have launched initiatives in Taiwan, Ireland, even Canada. Those examples are too numerous to mention. You probably don’t want to consider the reality that more than 10,000 jobs were lost in the U.S. in 2012 because of this tax.

  • Judi Youdelis Hinton

    The tax does not single out the medical device industry for unfair treatment. The excise tax is one of several new levies on sectors that will gain business due to health reform. The expansion of health coverage will increase the demand for medical devices and could offset the effect of the tax.

    • John Eckberg

      It clearly and without a doubt goes to great length to single out this industry. And there will be no gain in business as a result because the coverage generally comes to younger patients who do not need these devices and won’t need them in large numbers for decades. What tihs tax does do, however, is peel from the balance sheet of a company in this industry the equivalent of a job that pays $50,000 a year and $33,000 in health care each and every 20 minutes of each and every day. Do you know any newly graduated medical engineers? It’s not a great time to be on the job market in this space as 10s of thousands have already been laid off.

      • Judi Youdelis Hinton

        so you are assuming that all the newly insured are young and healthy? What about all those babyboomers? Do they not count? the tax is 2.3 it’s not a big deal, the problem is that the wealthiest members of the industry don’t want to give up anything which is standard proceedure. This conversation is no different than talking about raising the min wage. More money in the system always equates to more money in the pockets of everyone. You gotta water your plants if you want them to grow…. the stingy attitude got america into this mess and the only way out is …you gotta spend money to make money.

        • John Eckberg

          Hello Ms. Hinton, you need to understand the basics of accounting: a top line tax is not a tax on earnings or what used to be known as Earnings Before Interest, Taxes, Depreciation and Amortization, which is commonly known as EBITDA. When this top line tax is floated down the balance sheet to EBITDA, it takes the cumulative tax rate for some companies to well above 50 percent. That is, every dollar earned has another dollar going to federal authorities. And this is happening in a marketplace that is global. Our competition may be based in Switzerland (3% tax rate), manufacture in Costa Rica (0%)and dump products on Group Purchasing Organizations in Florida (assume the 2.3 percent tax rate is a mere 10% tax equivalence although for some it’s much much worse). So that product has a total tax rate of 13%. Compare that to the same product made in the U.S. (30% tax rate plus 10% equivalence from this tax and 5% local tax rate) for a total tax rate of 45% and a huge price disadvantage. A 2.3 percent tax on gross sales is a huge grab. I am the media relations director at Cook Medical.

  • Judi Youdelis Hinton

    wow can you say this is the worst piece of journalism i’ve read in a while…would it really harm you to be honest ?

    • John Eckberg

      And I wonder if you go anywhere but to the ACA apologist workbook to get your questions and answers.

      • Creighton D Jenkins

        John, You’re talking to a wall. But thanks for spending the time and effort to inform, very helpful.

        • John Eckberg

          Hello Mr. Jenkins, I really have a lot of faith and hope for exchanges like this. I used to be a reporter at a major newspaper and had these sorts of cyber-exchanges on a daily basis. But, yes, I know how you feel. There is a general unwillingness to NOT believe anything from any company representative so that is frustrating. Thanks for your comment.

          • Creighton D Jenkins

            John, Just to clarify, I agree with you. What I find fascinating is the inability of people, in our current culture, to connect the “dots”. You presented a logical argument and had to repeat it over and over. I appreciate your tenacity.

          • John Eckberg

            Hello Creighton D. Jenkins, It’s an immensely important topic and Americans and their lawmakers need to understand all the nuances. I think these sorts of chat strings offer an opportunity to do that. Know, too, that your comment is appreciated. Thanks and best wishes, John

          • Creighton D Jenkins

            John, I found this discussion because I was looking for info on the med device issue and it has been very informative from all sides. Still being a bit naive on the subject: Why the excise tax on med devices? Was it just random, other than med devices fall under health care and they assumed the med device companies had deep pockets? As someone else mentioned, med devices are used to help people unlike cigarettes and alcohol and they’re not exactly luxury goods. What about the large pharmaceutical companies? It seems that would make more sense, though they are probably being taxed to the limit too.

          • John Eckberg

            This is all my two cents (funny how people see the world from their own potato) but device companies were levied because the presumption was that device companies would get millions of new patients under the ACA. And on the face of it, that seems to make sense. Except we won’t get that tsunami of new customers because folks who need our devices already get them. I suppose some companies will see a bump in sales. Implants, for instance, or cardiac care products are likely to get otherwise uncovered 50-somethings who today must wait to be old enough for Medicaid/Medicare.

            Pharma companies received a fee but, in fact, they are going to get 30 million new patients – at four prescriptions or more a piece. Hospitals, too, are going to get the “no pays” off their books so the ACA does bring them value. Not so device companies. When this measure was hatched, it was going to be 5 percent for the sole reason that medical devices represent 5 percent of the cost of healthcare. Honestly, that was their math. Then lawmakers figured out that the profits of the average device company represent just 3.5 percent of revenues and that meant the first incarnation of this tax would confiscate all the profits of the average medical device company.

            So after much consternation, lawmakers agreed to cut it to 2.3 percent…so it only takes 60 percent of the profits of the average device company. Also, unlike hospitals and Big Pharma, no group or trade association represents the 15,000 device companies in the U.S. Lawmakers will say that the trade association AdvaMed signed off on this tax, you know, a deals, a deal, and all that. But AdvaMed represents Goliath companies (and many of them have Big Pharma divisions and likely to benefit) that have a worldwide footprint. So a tax on sales in the US isn’t such a big deal if only 30 percent of your revenues come from the U.S. So there was nobody, really, for lawmakers to negotiate with or bring to the table.

            In fact, this tax puts U.S. centric companies at a big disadvantage to major international firms, particularly those that have Pharma subsidiaries, because they can afford to pay a tax that may only claim five percent of their profit, as opposed to the harm that a topline tax brings to a company that has thin profit margins. I’ve had execs tell me that this tax claims all of the profit from their company in 2012. It’s the classic case of a tax created by somebody who has never run a business nor probably looked at a balance sheet. A top line tax when it’s then applied down the balance sheet where taxes are usually logged will be a 30 percent increase in the federal tax bill for the average company.

          • Creighton D Jenkins

            John, Reading between the lines, it sounds as if this tax could be in the best interest of the Goliath companies pharma/med device companies since it could potentially force the little guys and startups out of business and possibly provide a buyout opportunity for the Goliath companies at fire sale prices. Obviously, the Goliath companies would gain greater market share. (Going out on a limb here.) Then the Goliath companies would monopolize the market, which of course is supposedly antithetical to the mindset that is pushing for the tax in the first place.

          • John Eckberg

            Hello Creighton, I think your conclusions are spot on. Another dynamic is that giant companies have significant revenues from overseas sales and are usually not just in the medical device space. So the foreign revenues are not going to be taxed. Nor will revenues from aerospace or automotive. That means for some companies just 20 percent or less of sales will be subject to the tax. And if the tax acts as a barrier to entry for start-up companies, which it does, then this tax is probably seen by some C-Suiters as an okay thing to have happen.

          • moon1234

            John,

            I work in IT for a medical device company in the states. I think what most people are missing in your discussion is that you can not seem to boil it down to terms they understand. It need to be explained in simple terms they CAN understand such as follows.

            You start a company, you invest 1 million dollars of your personal money to get it going. All of that money goes to purchase a building, hire staff, pay for office supplies and buy the raw materials to make your product.

            You then earn 1.1 million dollars from selling your product over the first year. That means a profit of $100,000 was made or you made a 10% profit margin (Very good for most companies)

            What most people will logically assume is that you pay 2.3% of the 100,000 as a “medical device tax”. This means you pay $2300. I think this is where the disconnect is happening.

            What REALLY happens is the government is taking 2.3% of the 1.1 million dollars in sales which is a tax of $25,300.

            $25,300 out of $100,000 is profit is a tax of over 25% of profit. If the profit margin is smaller, say only 5% then the tax equates to over 50% of the total profits. This does not include all the other taxes that companies must pay.

            Now imagine that you have to pay this tax before your customers pay. MOST medical device companies MUST give their customers 60-90 days to pay. This means that a company may need to take out a loan, lay off staff or find the money somewhere else to pay the tax.

            It is beyond absurd that this tax is assessed BEFORE a company factors in their expenses. A 2.3% tax on total sales is NOT the same as a 2.3% tax on profits.

          • John Eckberg

            Excellent summation!

          • moon1234

            What also needs to be pointed out is that this tax does NOT apply to sales of devices sold to FOREIGN customers. It is MORE profitable to sell devices to CHINA and India, that it is to sell to US customers. They get US made products cheaper than US customers, due to not having to pay this tax.
            For some multi-national healthcare customers, it is cheaper to buy the product from the US as foreign company, ship it to a foreign port and then have it shipped BACK to the US without paying the tax. The medical device manufacturer does NOT have to pay the tax on sales to foreign companies and there is no provision to tax the devices once they re-enter the US, especially from China.
            It doesn’t take companies very long to realize it is just cheaper to have the product made IN china or India for their market. Then ZERO taxes are paid to the US government.
            It is not hard for a small company to have medical devices made in foreign lands. Take a look the next time you go to the doctor. I bet almost anything that does not cost $1000 or more is made in some foreign port.
            It truly does feel like the current administration is trying to KILL the medical device community in this country or at least drive all of the manufacturing OUT of this country to lower tax countries.

  • synchroman

    Breaking from Newsmax.com

    Snowe: GOP ‘Moved to Extremes’

    Former Sen. Olympia Snowe of Maine says the
    Republican Party has bowed to extreme elements, making it unrecognizable
    from the GOP she joined years ago.

    “Obviously it’s moved to the extremes. I wouldn’t
    characterize everybody within the tea party movement, but certainly
    there are broad elements within the party now that are driving their own
    agenda for their own advantage, irrespective of what implications it
    has for the Republican Party,” Snowe told Ashleigh Banfield on CNN
    Newsroom.

    “And certainly, this isn’t a party that I recognize and the party that I joined when I first enrolled, and that’s regrettable.”

    Snowe, named one of America’s Best Senators by
    Time Magazine, in 2006, is thought of as one of the leading moderates
    with the Republican Party. She retired from the Senate last year.

  • synchroman

    So Carey Goldberg, is it not a tax that is paid for the device
    at the time of the sale at the counter? Would this not mean that each customer
    pays the tax and not the provider of the device.

    The problems that exist in ACA were caused by the same people
    who all complaining about ACA. The ACA was originally a single payer bill such
    as Medicare. The bill was amendment with so many amendments by the people who
    have from the start did not want a single payer health care system. These same people
    are the ones who will get people to hate Medicare and ACA but are the same
    people who did not hesitate to use it. Check it out. I can not in this media
    list all the time that they have so done. Google it.

  • Bob Snyder

    How is this different from the excise tax we pay everytime we buy a tire?

    • John Eckberg

      As a consumer, you pay the tax on the tire. Device consumers, aka patients, do not pay the tax. Medical device companies must pay the tax – every two weeks. We cannot pass it along even if we wanted to pass it along because agreements these days are not with hospitals but with Group Purchasing Organizations and the like, who negotiate for hospitals. Those contracts are often locked in for five years, although three years is probably the norm. There are no provisions for price increases. So, medical device companies have no choice but to strip the funds for this tax right out of profits, which are already slim because of overseas competition. In many cases, competition from outside the U.S. start with a total tax base that is much much lower than in the U.S. Hope this is helpful.

  • Dean

    Obamacare doesn’t kill jobs. The big CEO’s that refuse to make any less profit to put in their pockets are the problem. Like Papa John’s, they refuse to absorb that little 12 cents per pizza to pay for employee healthcare so they are laying off people. Crooks…..

    • Snooman

      Yes, simply yes.

    • thinkingabovemypaygrade

      The article lists some reasons to support his thesis…but you make an assertion…only mentioning Papa John’s. Meantime (at least by me) I know many who CANNOT now find a fulltime job. (employers trying to prepare for the BIG Obamacare insurance effect by limiting fulltime employees)

      • synchroman

        That is not really the truth. The mandate on the businesses was the amendment that the Republicans added to the original single payer bill similar to Medicare and what the Military get. Your representatives never wanted avoidable health care for America just as they did not want Medicare in the 1960s. But once it was in place the people who were against it jumped on board to profit from it. You need to be more aware of American History and you will not get it from the false conservatives who have been rewriting it to fit there bully agenda. One cannot call themselves an American if they leverage their fellow Americans for ideology reasons. The Golden Rule: Do until others as you would have them do unto you. Also you will reap what you sow.

    • thomaspainelives

      You really believe that Papa John’s is mean because they won’t absorb that 12 cents per pizza? That adds up to about 9 million dollars in profit he’s losing. Anyone who throws away that much money would be fired by the board of directors and roasted by the stockholders for malfeasance. Obamacare sure as hell does kill jobs; most businesses operate on a fairly thin profit margin. That’s why anything, including a rise in the minimum wage, is frowned upon. You never studied economics did you?

      • Nottheusual1

        The only people saying he can’t pass the cost along are the ones making the same false argument you are.

        • synchroman

          Amen

      • Fahad Kashem

        No, but we did study ethics.

        Boo hoo…9 milion dollars…The company’s annual revenue is 1.3 billion dollars.

      • 31Forever

        Yeeeeeah, that extra $9 million in profit was so important to Papa John, that he walked back his statements completely, and now says that all his stores will comply with the ACA.

        http://www.forbes.com/sites/rickungar/2012/11/21/papa-johns-schnatter-says-he-will-honor-obamacare-and-give-health-insurance-to-all-employees/

        • thomaspainelives

          Want to bet there was pressure from the feds? Been done before. It also put him in a bad light to the ignorant people who don’t know better. He runs a corporation, decisions like this are the reason companies go broke.

      • Speak2Truth

        Notice how the Leftie shifted the conversation over to a Pizza place instead of the real problem – driving up the cost of life-saving medical devices people need to survive, making it harder to produce and sell them competitively in the USA so American companies can be undercut by Chinese companies that sell us faulty, crappy products…

        Medical device companies can now be squeezed out of the USA so China can become an even more dominant economic superpower, forcing us to rely on them for our NEEDS, then can use our own money against us.

        Taxation is the power to destroy productivity and innovation and Democrats are wielding it with a purpose.

    • Erick Holmes

      You’re right. These CEOs only care for themselves. They don’t care about hard working middle class people. In fact they love building expensive manors and buying nice cars.

  • common sense american

    When will this country STOP with the special rules that only apply to special types of business. We shouldn’t differentiate between company x or y in how they make their money. It is not the government’s job to pick winners and losers. In this case, they are doing their best to slam the likelihood of American companies to compete in a truly growing industry. Who needs high tech, high paying jobs? We do!

  • fun bobby

    this sounds almost as stupid as the tech tax. are these guys slow?