Congressman Mike Simpson today supported passage of H.R. 436, the Health Care Cost Reduction Act, which passed in the House of Representatives 270-146. Simpson is a cosponsor of the bill, which repeals a new 2.3% tax on medical devices such as coronary stents, hip implants, and parts for dialysis machines. The tax was included as a “pay-for” to cover the costs of President Obama’s Health Care Bill.
“Idahoans have made their voices loud and clear that jobs and the economy are the most important issue to them,” said Simpson. “A lot of people in Washington say a lot of things about jobs, but talk is cheap. Congress must to act to allow for job growth and protect those who do have employment, and this tax on medical devices is a job killer. We need to repeal it.”
The medical device industry employs more than 400,000 people across the country, and a vast majority, 80%, of medical device companies are small businesses with less than 50 employees. There are estimates that this tax could lead to the loss of tens of thousands of jobs when it comes into effect in 2013.
“The reason this tax really hurts these businesses is because it taxes sales, not profits,” added Simpson. “If a company had $1 million worth of sales, giving them a profit of $100,000 for the year, the tax would be $23,000. That is almost one-quarter of a company’s profits. That is a serious blow for any size business.”
If a company cannot absorb the new tax, they would be forced to move jobs overseas or increase the cost of their product.
“The reality is this tax will drive jobs and innovation away. As a former dentist I know it would increase the costs for healthcare consumers in the form of higher device and drug prices and higher insurance premiums.”
The cost of H.R. 436 is fully offset and the Congressional Budget Office estimates it would decrease the deficit by $6.7 billion over ten years. It now moves to the Senate for consideration.