E-Newsletter

The Young, the Old, and Everyone in Between Taxes

In last week’s column, I pointed out just two of the bad ideas included in President Obama’s health care law, also known as the Affordable Care Act (ACA) or ObamaCare. In both cases – the Individual Mandate Tax and the Tax on Small Businesses and Self-Employed Individuals – I think it’s important that people understand that hardworking Americans, like you, are going to end up paying these new taxes.  In this week’s column, I’d like to highlight two more devastating ObamaCare taxes that will (if they aren’t already) also negatively impact your pocketbooks. [As compiled by Americans for Tax Reform, a full list of the twenty taxes can be found here.]

Medical Device Tax (Takes effect Jan. 2013):

As was reported last month, the number of knee replacements paid for by Medicare has more than doubled over the last two decades.  Well, starting in January of 2013, anyone receiving a knee replacement, a new hip, a simple x-ray, or anything which includes a medical device will likely see their costs go up.  Like the other disguised ObamaCare taxes, this new 2.3 percent excise tax on “medical device manufacturing” sales isn’t fooling anyone. We know full well that, despite any rhetoric we may hear, the true burden of this tax will fall on all the people who purchase or need new medical devices. 

Because they require more health care attention than younger generations, I believe seniors will bear the brunt of this new tax.  But some are ‘in-between” – like Ninth District resident Jack Morgan, who lost his leg after being struck by a car while helping accident victims on I-81; the cost of replacing his prosthetic leg will also go up.  According to Jack, each prosthetic leg costs about $45,000 and lasts about five years.  Add another 2.3 percent to the cost, and someone is going to have to pick up the extra $1,000. 

On top of raising the costs of medical devices on consumers, this new tax is also wreaking havoc on job creators. The “medical device manufacturers” tax hits revenues, not just profits.  Already, the effect of this new tax is costing Americans high-paying jobs. Thanks to a recent Forbes article written by Dr. Scott W. Atlas, Senior Fellow at the Hoover Institution, we know that companies all across the country are being forced to lay off employees and shift jobs overseas.

• Boston Scientific says ObamaCare’s new taxes will cost more than $100 million a year, so it built a $35 million research center in Ireland instead of the U.S. and announced another $150 million site in China.

• Stryker of Michigan announced job cuts of 1,000 workers last November “in advance of the new Medical Device Excise Tax.” CEO Curt Hartman reiterated this month that the tax will force companies to move their operations overseas, eliminating American jobs.

• Cook Medical of Indiana scrapped plans to open five new plants in the Midwest, while saying “in reality, we’re not looking at the U.S. to build factories anymore as long as this tax is in place.”

• San Diego based NuVasive’s CEO Alex Lukianov wrote, “to offset this tax increase, we will be forced to reduce investments in research and development and cut up to 200 planned new jobs next year” and “as a result of the law, for the first time in our history we are being compelled to consider moving manufacturing, clinical trials and investment in new innovation to more business-friendly countries.”

• CEO Mark Waite of Lighthouse Imaging in Maine stated: “This [tax] will end up making the cost of goods higher, and since most of these medical devices are required, as opposed to being optional, that cost gets passed on to the consumer and the cost of care goes up.”

Though it’s still awaiting a vote in the Senate, I joined my colleagues in the House and voted to repeal this tax months ago.

*Exempts items retailing for less than $100. Bill: PPACA (ObamaCare); Page: 1,980-1,986

Obamacare Flexible Spending Account (FSA) Cap – aka “Special Needs Kids Tax” (Takes effect Jan. 2013):

Starting in January of 2013, the “Special Needs Kids Tax” imposes a cap on FSAs of $2,500. Currently uncapped, FSAs are essentially income tax free. There is one group in particular which is hit especially hard by this new tax:  parents of special needs children. According to Americans for Tax Reform, there are thousands of families with special needs children in the United States and many of them use FSAs to pay for special needs education. To demonstrate the impact of this new tax, let’s look at the tuition rates at one leading special needs school in Washington, D.C.  Tuition rates at the National Child Research Center can easily exceed $14,000 per year. Present tax rules allow FSA dollars to pay for this type of special needs education.  But, with the cap in ObamaCare, parents are going to have to pay more out-of-pocket.  Bill: PPACA (ObamaCare); Page: 2,388-2,389

Our federal health care laws desperately need reform. As a nation, we need to have an open and thoughtful debate about the details of this reform. I believe the few good ideas included in ObamaCare should be kept in new reform bills – bills that are not 2,400 pages long, and bills that the American people have been given an opportunity to read and provide input on before Congress votes on them. It is imperative that we repeal ObamaCare and replace the crippling costs and mandates it imposes on the American people with patient-centered, patient-controlled reforms that would make access easier and costs lower.

As always, if you have questions, concerns, or comments, feel free to contact my office. You can call my Abingdon office at 276-525-1405 or my Christiansburg office at 540-381-5671. To reach my office via email, please visit my website at www.morgangriffith.house.gov.

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