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In Michigan, Obamacare is Already a Job-Killer

Posted By Jay Lucas On November 19, 2011 @ 7:00 am In Featured,Obamacare | Comments Disabled

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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 [2] that it will cut approximately 5 percent of its workforce by 2013 due to the tax. As Heritage has shown [3], 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 [4]. 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 [3] 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 [5] 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 [6] 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. [7]


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2011/11/19/in-michigan-obamacare-is-already-a-job-killer/

URLs in this post:

[1] Image: http://blog.heritage.org/wp-content/uploads/detroit-michigan-skyline.jpg

[2] announced: http://www.massdevice.com/news/stryker-plans-lay-5-its-workforce-ahead-med-tech-tax

[3] Heritage has shown: http://blog.heritage.org/2010/03/30/side-effects-medical-devices-tax-will-costs-jobs/

[4] 11 percent unemployment: http://www.google.com/publicdata/explore?ds=z1ebjpgk2654c1_&met_y=unemployment_rate&idim=state:ST260000&fdim_y=seasonality:S&dl=en&hl=en&q=michigan+unemployment+rate#ctype=c&strail=false&bcs=d&nselm=s&met_y=unemployment_rate&fdim_y=seasonality:S&scale_y=li

[5] report: http://www.hlc.org/blog/wp-content/uploads/2011/09/090711EmploymentEffectofTaxonMedicalDeviceIndustryFINAL.pdf

[6] Heritage tax expert Curtis Dubay: http://www.heritage.org/Research/Reports/2011/01/Obamacare-and-New-Taxes-Destroying-Jobs-and-the-Economy

[7] Click here for more information on interning at Heritage.: http://www.heritage.org/about/departments/ylp.cfm

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