REVIEW & OUTLOOK:: Improvised Explosive Device Tax – WSJ

By at May 29, 2012 | 12:42 am | Print

REVIEW & OUTLOOK:: Improvised Explosive Device Tax – WSJ

‘Taxmageddon’ isn’t only about the half-trillion-dollar blow to the economy that arrives in 2013 on the end of the Bush-Obama tax rates. Several of the Affordable Care Act’s worst tax increases kick in too, such as the new excise tax on medical devices.

The 2.3% levy applies to the sale of everything from cardiac defibrillators to artificial joints to MRI scanners. The device tax is supposed to raise $28.5 billion from 2013 to 2022, and it is especially harmful because it applies to gross sales, not profits. Companies at make-or-break margins could be taxed out of existence, especially in an intensely competitive industry where four of five businesses are start-ups or midsized.

As even the liberal papoose Elizabeth Warren recently put it, the device tax “disproportionately impacts the small companies with the narrowest financial margins and the broadest innovative potential.”

Yet this very dynamism is what led Democrats to target the industry. As part of writing ObamaCare, they decided that all “stakeholders” should contribute something, but changes to the ordinary corporate tax code wouldn’t raise enough money and would have hit many other innocent bystanders in manufacturing. So they chose an excise tax. About the only exemptions are for things that retail consumers buy directly, such as contact lenses or hearing aids.

via Review & Outlook: Improvised Explosive Device Tax – WSJ.com.

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