The Advanced Medical Technology Association released a survey on 02/19/2014 titled Impact of the Medical Device Excise Tax which showed some interesting results, unintended though they may be. Via WashingtonTimes.com.
Some of the key findings:
The tax has resulted in employment reductions of approximately 14,000 industry workers and forgone hiring of 19,000 workers. The total job impact of the tax on industry employment was approximately 33,000.
Independent estimates of the relationship between direct employment in the industry and indirect employment among suppliers and in the general economy found a ratio of four indirect jobs for each direct job.1
Applying this ratio to jobs lost or foregone suggests that the impact of the tax on indirect employment would be approximately 132,000 jobs, for a total job loss due to the tax of as many as 165,000 jobs.
Almost one-third of respondents (30.6%) said they had reduced R&D as the result of the tax.
MOVED JOBS ABROAD
Almost 10 percent of respondents said they had relocated manufacturing outside of the U.S. or expanded manufacturing abroad rather than in the U.S. because of the tax.
OTHER NEGATIVE IMPACTS
Three-quarters of respondents said they had taken one or more of the following actions in response to the tax: deferred or cancelled capital investments; deferred or cancelled plans to open new facilities; reduced investment in start-up companies; found it more difficult to raise capital (among start-up companies); reduced or deferred increases in employee compensation.
While the focus of the survey was on effects of the tax in its first year, several questions were future-oriented and suggest that the tax will have additional negative impacts over time if not repealed.
58% of respondents said they would consider reducing employment if the device tax were not repealed.
50% said they would consider reducing R&D investment if the device tax were not repealed.
There was one aspect of these survey results that could have had a bearing on how the questions were answered: "Sixty percent of the respondents were currently operating at a profit, while 40% were not." A company in the red may be planning on cutbacks anyway.
Nevertheless, logic tells us that any company facing a tax on its products will make adjustments to compensate for the expense of that tax, whether it be raising prices if the marketplace will allow it, or cutting costs elsewhere.
Fortunately for the human race, this Obamacare tax only affects American companies. The creative powerhouses elsewhere may take up the slack. President Obama has always seemed uneasy with America's role as world leader, and here's one area which might provide him some comfort.