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  • In Michigan, Obamacare is Already a Job-Killer

    While the White House continues its rhetoric on job creation, the job-killing effects of Obamacare are already taking effect. One provision of the law, its tax on medical device manufacturers, is already having a detrimental impact on a Michigan-based manufacturer.

    Stryker Corporation has announced that it will cut approximately 5 percent of its workforce by 2013 due to the tax. As Heritage has shown, this isn’t the first device manufacturer to voice concerns about job loss in the U.S. resulting from the tax, and it is sure not to be the last.

    Over 110 jobs will be cut in Kalamazoo alone, bad news for a state already facing over 11 percent unemployment. According to the firm:

    The targeted reductions and other restructuring activities are being initiated to provide efficiencies and realign resources in advance of the new Medical Device Excise Tax scheduled to begin in 2013.

    As Heritage policy analyst Kathryn Nix explains, the medical device industry “now faces major job losses due to the new Obamacare tax on medical devices. The tax is intended to raise $2.2 billion a year to help foot the bill for Obamacare.” But despite the fact that the raised revenue will be a pittance compared to the price tag of new Obamacare spending, its impact on jobs in the medical device industry, and the cost of their products, will be very real.

    A report released in September by Diana Furchtgott-Roth, former chief economist at the Department of Labor, illustrates the potential effects of the tax on firms like Stryker and the rest of the device manufacturing industry, which employed over 400,000 Americans in 2009:

    The new 2.3% excise tax will roughly double the device industry’s total tax bill and raise the average effective corporate income tax rate to one the highest effective tax rates faced by any industry in the world. Moreover, the new tax will be paid both by firms that have net income and those that do not. The tax will be especially harmful to companies that innovate and tend to suffer losses in the first years or when investing in research and development for a new product but would still be required to pay the tax.

    The medical device tax is just one of many new taxes included in the new health care law. These taxes will hinder America‘s economic recovery and job growth. As Heritage tax expert Curtis Dubay writes:

    All tax increases have negative economic effects because higher taxes take resources from the productive hands of the private sector and transfer them to the wasteful hands of politicians. Higher taxes also lessen the incentives for individuals and businesses to engage in activities and behaviors that expand the economy and create jobs.

    Obamacare’s taxes and regulations are the last thing our country needs right now as unemployment remains above 9 percent and the economy stagnates.

    Jay Lucas and Alyene Senger are members of the Young Leaders Program at The Heritage Foundation. Click here for more information on interning at Heritage.

    Posted in Featured, Obamacare [slideshow_deploy]

    22 Responses to In Michigan, Obamacare is Already a Job-Killer

    1. suburbanguk says:

      But at the same ime these companies are getting MILLIONS of mandated new clients. I actually invest in SYK stock, thinking Obamacare will be good for their business. The CEO also blamed "a challenging economic environment and a market slowdown in elective medical procedures." Medical device makers have had a rough year, companies like Bard and Becton Dickinson, regardless of the tax. Companies make layoffs for efficiency. If SYK thought these employees added value, they would not lay them off. Layoffs are bad for public relations, so you always have to have an excuse, but SYK wouldn't just lay people off to pay a tax, unless those people were expendable anyway.

    2. Mike says:

      Libs and the UAW have been running MI for 40 years. It's dead and will never come back. Why would any one live there?

    3. MarkInArizona says:

      It's interesting that Stryker Corp Director, Ronda Stryker, has been a substantial contributor to Democratic causes as has Stephen MacMillan, Stryker President and CEO who has given thousands to Dem pols through the Advanced Medical Technology Association (AdvaMed) over the years. In return for their generosity, what do they get? Higher taxes, increased costs of their products and job losses for their company. DuhhhOOOO!!!

    4. Bob says:

      This squirrel reminds me of those little golfball carts on the driving range that pick up the little white dimpled balls with relative ease. This entire administration does exactly the same thing with Unconstitutional mandated laws for the scraping in of money that will go to no one but them in the end. The off shore Caman account deposits are at an all time high and all of Congress ns the Senate are watching their wealth while under this totalitarian regime grow leaps and bounds. To that presume to think that this result is accidental, I feel for your ignorance to the issue at hand.

    5. Bob says:

      Not only is this by blatant design but the design of this ultimate little spoiled rotten boy is actaully kicked into high gear. Why? because he knows that his reign of Treasonous Traitorisic dictatorial totalitarianism is nearly over. So this consumate little boy, throwing his toddler tantrum is behaving in a mannor that is designed to gain as much as communistically possible. So when the house and Senate is regained by the other party, good or bad, watch the jobs start coming and the bills start delining as well as the National debt. No this is not a prediction. It is a matter of archival fact and history! Every single time throughtout history when a Democrat was in the oval office our taxes have gone up as has unemployement. Yet each time the Conservatives held that same seat, the taxes and unemployement have seen decline! This FACT cannot be denied nor impuned!

      • Douglas says:

        Bill Clinton and his administration would like a word with you…and the Bush administration and Reagan ones are laughing their asses off at you.

      • Colin says:

        Sir, your argument is atrocious. You provide no references to vet your 'facts'. You seem to have combined Glenn Beck's talking points with Sarah Palin's propensity to use words that do not, in fact, exist. To top it all off, you seem to think an article about the loss of 110 jobs is yet another sign of the apocalypse. You also are talking about those jobs being lost in a city that, due to its own municipal mismanagement, has been losing jobs (and job creators) to Grand Rapids for the last 20 years. If you are a Michigan resident (which I highly doubt) go to Grand Rapids; the recession practically isn't happening there. The local economy is doing great. The reason for this is that the local government (not the commifascismuslimocracy which you seem so afraid of) is doing a great job of running a city businesses want to be in, while kalamazoo has gradually been turning into a slum since the mid-80's. Go preach somewhere else, we're trying to read the news.

    6. Steve says:

      Except that the jobs they're eliminating are in business units where sales have been flat (Orthopaedics, based in NJ) or redundant positions created by acquisitions (Orthovita in PA). The tax is a convenient way for Stryker to pass of changes it would have to make anyway because of ongoing business volumes and restructuring. There's little doubt that some companies will be affected by this tax but Stryker – regularly meeting or exceeding analyst estimates for sales and profit while on a 3-year acquisition spree – is a bad example.

    7. Michael W. says:

      The 2.3% tax will double the industry's current tax bill? In that case, it seems like the problem is more with their current tax rate.

      • The 2.3% excise is on revenue, before expenses, that is why it has such a large impact. If the companies have a $1000 in revenue and $900 in expenses their income is $100. The 36% corporate income tax would take $36. But the 2.3% excise is on the revenue, so the excise takes $23 plus the $36 income tax.

        But even worse, if the company loses money they still are taxed. A normal income tax only takes a percentage of profits (income). The excise will take money they don't even have.

    8. Bob says:

      who cares about jobs when you can get gov to give you free stuff ?

    9. Mike, Wichita Falls says:

      Why is money, in the form of profits, in the hands of the private sector evil while money, in the form of taxes, in the hands of the public sector as clean and pure as the wind-driven snow? The former leads to more jobs, better-paying jobs, more innovation and better quality of life while the latter leads to waste, fraud, abuse and corruption.

    10. JSNYC says:

      Q. is there a master list of jobs killing Obama-signed legislation, executive orders, and Administration departmental and agency policy, rules, and regulations?
      Q. What's on the list of PASSED BY THE HOUSE jobs legislation that has been denied consideration in the Senate by Harry Reid's failure to schedule and to permit amendments?
      Q. Are Senators going to ask for reconsideration each and every day until the 24 proposed bills are set for discussion and have letters gone to the Senate demanding that the legislation be addressed?

    11. Lorraine Mason says:

      I'm all for Obama Care and the good that it does. The naysayers are just opportunistic and see Obama Care as a good scapegoat. They would like to continue the status quo so they can sock it to the American people.

      • Bobbie says:

        what good does it do? you'd rather put government in control of your personal health? that's not good. that's dangerous!

    12. GHG says:

      So they are scaling back on the division that is flat – and blaming it on Obamacare. Looks a little opportunistic.

    13. Steve D says:

      Here's the deal gang. Someone who has lost his job and home and whose unemployment benefits have run out doesn't care beans about your profitability. And they make up a heck of a lot more than 1% of the population. So if you don't want Obama re-elected, maybe with a real majority in Congress, get off your lazy butts now and start hiring. Unless you want your McMansions taken over and turned into homeless shelters.

    14. rmgdonnow says:

      Does anyone doubt that Obama knows that new taxes on medical devices will result in fewer of these produced, and at higher prices?? I don't know his motivations, but they are NOT better health care for America.

    15. Bobbie says:

      if everyone could just consider the whole premise! GOVERNMENT INTERFERENCE! GOVERNMENT OVERREACH! UNCONSTITUTIONAL ACTS OF GOVERNMENT! free market doesn't waste, that's all obama has been doing since he's been in office. sincere doctors are inspired to heal. government doctors are willed to keep the business going at any extent government instructs them to. why the need and costs of the middle man government if not for corrupt purposes?

    16. Please read Michelle Malkin's book – Culture of Corruption. If you don't then see the light, you are hopelessly blind!

    17. Mark says:

      The reason Stryker laid off 5 % of its workforce is because of the 2.3% tax on revenue – in combination with the fact that the Orthopaedic division is flat. Understand that the Orthopaedic division is flat because of the horrible economy we have been in for the last 4 years. The entire industry is flat because of Obamas policies – now he is putting companis like Stryker over the top with not just a miss management of the economy overall but an additional tax on revenue. It's a double dip.

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