Governor Pence Urges President Obama to Support Repeal of the Medical Devices Tax

One of the immutable laws of economics that when something is taxed you will get less of that something.  If you tax income, you discourage people from working.  If you tax savings, you discourage people from saving money.  If you tax people buying goods, spending will decrease.  If you tax home ownership, people will be discouraged from owning homes.  Making things more expensive, has consequences.

With that said, probably the worst tax I can think of is the 2.3% tax on medical devices levied by the Affordable Care Act, aka Obamacare.  I can't imagine a worse tax. Why would we want to discourage the development of medical devices, an area where the United States is a leader?

Indiana Governor Mike Pence recently urged President Obama to repeal the tax.  The Indianapolis Business Journal reports:

Governor Mike Pence

Indiana Gov. Mike Pence sent a letter to President Barack Obama on Monday asking him to work with Congress to repeal a 2.3-percent excise tax on medical devices that is helping to pay for the federal health care law.

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“Repealing the medical device tax will allow companies to expand and grow jobs, not only in Indiana but across our great nation,” Pence said in his letter. “This thriving industry should be allowed to innovate and grow, rather than be hampered by an industry-specific tax.”

The tax is expected to generate about $29 billion over 10 years, according to the Joint Committee on Taxation. That money is being used to pay for subsidies to help lower- and middle-income Americans buy health insurance.

The tax is levied on equipment, stents, pacemakers and other devices manufacturers sell to hospitals and other health care providers. But it doesn’t apply to medical equipment – such as hearing aids – that are sold directly to the public.

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But Obama previously threatened to veto bills to eliminate the tax. The White House has said the health care industry – including medical device makers – will benefit from additional customers as millions more Americans get insurance through the Affordable Care Act.

But according to Pence, the state’s medical device companies are moving work overseas or cutting costs.

“I have heard from many Indiana-based medical device companies – small and large, start-ups and well-established – that have reduced research and development at their facilities or reduced wages for their employees,” Pence wrote in his letter to the president.

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