It’s true that politics certainly does make some strange bedfellows.
As our elected officials try to out-wrangle each other on the way to agreement on the debt ceiling, some conservatives are not at all happy that Republican congressional leaders are trying to do away with Obamacare’s tax increase on medical devices. We thought that was a tax that those same conservatives oppose.
Usually, when you want to encourage something, you tax it less, or not at all. But the monster needs feeding, so when the Obamacare architects went hunting around for a spare $30 billion over 10 years, they excitedly discovered that they could throw a calamitous 2.3 percent surcharge on medical products designed, made and sold in the United States.
Did we also mention that they wanted to throw a little red meat to trial lawyers, a key Democratic fundraising constituency who make a pretty good living out of suing the stuffing out of medical device manufacturers, no matter how flimsy the case may seem to the rational mind? (Although in this case, they may be killing the fatted calf.)
The medical device industry (full disclosure: I used to be a part of it) employs about 400,000 people directly and an estimated 2 million indirectly, with a 2012 market value exceeding $110 billion. We also benefit from exports of roughly $44.2 billion, a 7.2 percent increase over 2011. This is one of the bright shining stars in the American manufacturing universe, with the U.S. medical device industry the clear world leader in new and innovative technologies. Add to that a doubling of medical device research and development, and you get an idea of the importance of this industry to both our economy and quality of American lives.
The device tax applies to sales revenue, not profit, meaning it hurts small and entrepreneurial companies with narrower margins more than it does corporate behemoths. About 80 percent of device makers employ 50 or fewer workers, and they now have to pay $2.30 on every $100 of revenue even if they make no profit. How’s that for entrepreneurial and innovation incentive?
Even the highly partisan, high-spending Sen. Harry Reid, D-Nev., gets the idea, calling this tax “stupid.”
So given that it’s a tax that presumably both sides want to do away with, and that it affects not only the manufacturers themselves but ultimately the health care consumers that depend on them, sometimes literally for dear life, you’d think this would be easy to repeal, right?
House and Senate GOP leaders, sensing a moment, decided that this might be a concession they could eek out in budget negotiations. They would look like heroes to actually get something they wanted, their constituents would love them and everyone would walk away happy. But then they had to do battle.
Not with Democrats but with their own party.
Yep, some supposed fiscally responsible and self-described “conservative” pundits are coming out to complain that repealing this tax — a tax, mind you, not a tax break or other subsidy — is some sort of massive Washington giveaway scheme.
Michael Needham of the Heritage Action political committee said that repeal would amount to “corporate cronyism.”
“With all the pain and suffering that Obamacare has inflicted on the country, to get out of this fight and only repeal a tax that affects just one industry is pretty laughable,” he told the Wall Street Journal.
Whoa, really? In the donation solicitations we receive, the Heritage Foundation talks about being a think tank that actually supports economic growth and small government. But now they are supporting the destruction of a healthy (no pun intended), prosperous, growing, American job-creating industry through the imposition of a crippling tax?
Well, this is one of those times where you just can’t make this stuff up.
Obamacare needs to be repealed at once, but as it is, we should at least be trying to make the law less destructive to the U.S. economy and job creation. As the Wall Street Journal opines, “a think tank that really believes that repealing a punitive tax on business is ‘corporate cronyism’ isn’t conservative and it certainly isn’t thinking.”
Opposing rational, responsible and sensible anti-tax policies that the right has actually said we support is insane. A quote for GOP leaders from Margaret Thatcher, who knew a thing or two about such things: “Standing in the middle of the road is very dangerous; you get knocked down by the traffic from both sides.”
Susan Dench of Falmouth is founder and president of the Informed Women’s Network, which motivates fiscally responsible women to make an impact on the political process. Contact her at firstname.lastname@example.org.