There’s nothing quite like the end of an odd-numbered year for fueling hysterical predictions about Election Day for the following even-numbered year.
2017 ended with all manner of doomsday predictions for the Republican majorities in Congress, fueled by a few small state-level election losses, an overwhelmingly negative media machine and many pointless protests.
But with 2018 underway, the GOP is bouncing back in business, with polls indicating that the supposed blue tidal wave will probably be more of a blue trickle: it won’t sweep the Democrats back into power, but it might be enough to wash a load of clothes.
The unending good news from Wall Street and the record low unemployment all portend very well for the party in power. With the passage of the tax bill, those economic gains look to become permanent. There was one very important item missing from the historic tax reform, though, but it looks like Congressional Republicans are fixing that problem: the excise tax on medical devices.
The term "medical device" covers a variety of items, including catheters, pacemakers, X-ray scanners and other life-saving equipment. To help fund the Affordable Care Act, the Obama administration slapped a 2.3 percent excise tax on these devices, hampering innovation and threatening lives. The medical device tax was one of those infamous parts of the 2,000-page bill that we had to pass to find out it was in it. It has proven unpopular ever since.
In 2012, the House voted to repeal the tax, the Democrat-controlled Senate voted to eliminate it in 2013 and Congress put a two-year moratorium on the tax in 2016. Last week, the Senate voted to approve legislation stripping the medical device tax from the federal code (by an inspiring vote of 81 to 18), and we can hope the House will follow. Utah Sen. Orrin Hatch has been a leader on this issue, helping also the Utah company’s that create medical devices. Repealing Obama’s tax would be a fitting addition to his legacy of fighting higher taxes and big government.
If the House fails to follow the Senate’s lead, the medical device tax will strike back.
Unlike most taxes, the Obamacare medical device tax targeted sales and not profits — so it could translate into an effective 60 percent corporate income tax rate, according to the nonpartisan Tax Foundation. Liberal Hollywood may be able to hide behind creative accounting to keep from paying its bills, but small and mid-sized medical devices can’t get away with that kind of fancy financial footwork.
Unnecessary taxation on any new commodity means we will get less of it. One of the reasons that Silicon Valley could explode with new ideas and technology is that it was moving too fast for Washington to tax and regulate. If we slap a tax on life-saving medical equipment, that means fewer saved lives.
This idea is betrayed by the fact that Obamacare labeled this an excise tax, which is a term typically reserved for known harmful quantities, like alcohol or cigarettes. If booze causes social harm (like drunk driving), then slapping a tax on booze will help society recoup the cost of that harm, which is perfectly logical reasoning — but why apply that same logic to heart stents and pacemakers?
Obama’s tax has irrefutably hurt the medical industry, as Dr. Ron Paul spelled out in a recent op-ed for Newsweek:
"As a result of this punitive levy, approximately one-third of medical companies and innovators cut their research and development spending.
"Three-quarters either had difficulty raising capital or stopped planned capital investments, ceased opening new facilities, reduced start-up funding, or canceled immediate employee compensation increases.
"These significant declines, which the moratorium largely reversed, were unacceptable given that America leads the world in technological advancement."4 comments on this story
In line with Paul’s analysis, The Wall Street Journal editorial board gave a wonderful prescription for what to do with the tax, “Republicans and President Trump can still put Democrats who criticized this tax to the test by forcing a vote to kill this unhealthy levy on jobs and innovation.” And National Review noted there was “radio silence from the (left-wing) ‘people will die’ crowd” on this clearly harmful tax.
The vote against this tax is good news for America, the medical industry and Senate Republicans. I am sanguine House Republicans will follow suit very soon — at least if they want to save lives.
The other net benefit, incidentally, will be to save their jobs as well.