Obamacare squeezing the medical device industry?
Former Sen. Evan Bayh weighs in
- Duration 4:13
- Date Oct 1, 2012
Former Sen. Evan Bayh weighs in
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This transcript is automatically generated
Okay when Democrats pass Health Care Reform they claimed it would save money and create jobs.
Now we're seeing exactly the opposite the new tax buried inside.
So called obamacare is costing -- this is big money.
And the only way to make up the difference.
Layoffs joining us now Fox News contributor and former democratic Indiana senator mr.
Evan -- thank you senator.
So blunt -- can -- and -- a couple of big names we have Welch -- we have cooked medical we have Zimmer Holdings.
These are companies who are -- deciding not to hire people open plants or actually.
Lay off people because of this medical device tax you tell us how much money are we talking.
Well this tax group will go into effect January 1 and the problem with that is it's not a tax on how much a company makes.
It's a tax on sales so you can actually be a non profitable company and still get hit with this tax and it's on top of what is already the highest corporate tax in the world 35%.
Many states have their own corporate tax and so it's.
It's you know harming the company's bottom line which leads to.
Lay offs or non in the case of -- they're not gonna open new facilities or moving production overseas it also takes many in the medical innovation for new devices new cures so.
That's why there's an effort afoot to do something about this and and a dysfunctional Washington.
I'm actually up modestly.
Hopeful that Democrats or Republicans work together on this the president's made job creation job number one I think when he finds out about this -- wanna do something about it too.
Well let's see let's take a look at that breakdown for the typical metal medical device company.
Percent tax on revenues winds up averaging about ten to 15% tax on profits.
Also combine that with 35%.
Corporate state corporate taxes.
They wind up pay and 50% tax rate in most jurisdictions.
So people you know senator.
You hear all it's only 2.3 percent that's just a little bit.
That's not just a little bit.
-- it's 2.3 percent of sales -- so if you're profit margins you know 10%.
It's a lot bigger percentage of your profits and that's on top of the other taxes you mentioned.
Notice tax deductible so that loses -- a little bit but when you add it all up 50% burden.
That's really tough to compete doing that so that means you know fewer jobs.
Moving jobs overseas wasn't -- -- that's why we need to do something about this and I.
I was talking to one of the leading Democrats in the senate last night he said there are a lot of Democrats who want to do something about this.
If we can find a way to offset the cost.
And that's why I think the president and others will get together.
You know as we approach the fiscal cliff in the context of you know -- to tax reform here and wanna -- and wanna do something about this Saturday.
-- do -- risk.
Losing net innovation that you point out we -- these companies say you know it's so expensive to do business here.
-- we can do -- in Mexico or Singapore somewhere overseas.
Well it's actually happening and part of the approval process is to blame for that as well.
It takes so long that our country if you get a different device approved first -- say in Germany.
And you -- you begin to solve that market you're gonna produce it near where you're beginning to -- -- so rather than being based you know somewhere and in our country Indiana for example or Minnesota Massachusetts other states.
They'll open a facility in Germany and export those products from Europe and the United States instead -- the way it is today.
This is one of the few industries where we make things here right and export them abroad so we don't want to harm our global competitiveness absolutely.
And senator a moment ago you were talking about how you are hopeful that members of your Democratic Party.
Before we hit the fiscal cliff will change their mind remember it was members -- your party that drew up completely the obamacare legislation so.
If you're gonna blame somebody poured -- them.
Well Steve it's if a fair point that it's in the law.
Now you know there are a lot of good things and -- other some bad things in law I'm convinced that people didn't really understand what the impact of this was going to be.
Now that that's out there I think there will be a willingness to know not point blame but instead say OK what imperfect we need to fix it out.
And let's figure out what we're gonna do -- we don't cost ourselves jobs we don't want armor competitiveness or -- Hopefully that's something Democrats Republicans can agree on.
I'm confident the president will have to put your right and -- SN thirty billion dollars that taxes -- estimated cost American companies satellite apparently -- senator Evan -- thank you sir.