Want to grow America's economy? Repeal the medical device tax

The quiet town of Warsaw, Indiana has been at the center of a heated debate in Washington, D.C. for the past six years regarding ObamaCare and its new tax on medical devices.

As the sitting U.S. Representative of Warsaw, known as "The Orthopedic Capital of the World," I wish to state the reasons for the overwhelming calls by a wide range of lawmakers to repeal the medical device tax.

The editorial board at The New York Times boldly proclaimed on Friday, January 30, that there was “No Case” for eliminating the medical device tax and dismissing it further by saying that this idea has only been given a “veneer of respectability” from the support of liberal senators, such as Senator Elizabeth Warren, D-Mass., who had the gall to buck her own president – curiously silent on his current position -- in order to protect good paying jobs in her home state.  As panic ensues about the prospect of the tax’s repeal, others will surely pile on.

One author for The Washington Post even recently declared that the $29 billion tax is the industry’s “share” of the ACA’s cost.  If this resonated with most Americans I suspect support for this tax repeal would not be at its highest point (272 co-sponsors in the House already) and there would be no need for such alarmist and misleading rhetoric.

Senator Warren knows, as I do, that this tax on sales of medical devices to pay for the president’s health care law has not simply been levied on the backs of big corporations (as she and others might have wished) but on the 24,000 workers directly employed by the industry in Massachusetts, the 20,000 workers directly employed in Indiana, and the rest of the over nearly 400,000 U.S. workers around the country.

In defense of the tax some proponents continue to cite the failed predictions of the Congressional Research Service (CRS) who believed the tax would have only a “relatively modest” effect on jobs and research.  Ask any of the 18,000 workers who have lost their jobs as a direct result of the medical device tax and I suspect you would not hear such a rosy assessment.

Worse than even the real job loss since the tax’s implementation, is the effect on this high-tech industry’s future growth.  While the opportunity cost of any tax is not always easy to quantify, there are a few things we do know.

First, given our aging baby boomer population, it doesn’t take a rocket scientist to make the bold prediction that demand for medical devices will grow in the coming years.

Second, we can be fairly certain that some new jobs will accompany this growth. No news there.

However, should the tax remain in place, there is no guarantee that any new demand will be accompanied by new jobs and manufacturing here in the United States. In fact, early indications suggest those manufacturing jobs are already moving to Europe, Asia, and elsewhere thanks to less aggressive tax climates.

It is intellectually disingenuous, if not dishonest, to use any example of the medical device industry’s ability to manage limited growth while straddled with this tax as an outright dismissal of any effort to repeal it.

To make such an argument is an insult to those who have lost their jobs as a result of the tax as well as those lucky enough to remain employed in the industry.  After all, the industry’s resilience is a direct result of their employees’ efforts– not the other way around.

Advocates for repealing the medical device tax see it for what it is – bad policy to fund the president’s health care law.  As we saw recently in the House, many of these advocates even disagree on the fate of the health care law as a whole.

This demonstrates the broad nature of support for repealing this part of the law.  Despite some disagreements, this group of lawmakers agree on the urgent need for sound policy in order to encourage job growth without unnecessarily taxing the collective efforts of medical device employees – many of whom we call our constituents.

The American people want both parties to work together to implement common sense reforms to strengthen our economy.  Let’s start by repealing the medical device tax.