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Letter of Support for Repealing the Medical Device Excise Tax, S. 232

February 13, 2013 J

Dear Senator Hatch:

On behalf of more than two million Americans for Prosperity activists in all 50 states, I am writing in support of your bill to repeal the medical device excise tax (S. 232). Although President Obama’s health care law was intended to lower the cost of health care in the United States, many of the elements in the law do the very opposite. The 2.3% excise tax on all medical devices sold in the United States is a prominent example. This tax will result in fewer jobs, less innovation, and higher health costs.

The tax will stifle investment and innovation in life-saving medical technology. The burden would fall particularly heavily on companies that are focused on researching and developing new medical technologies, which are not always profitable in their infancy. Since this tax is on sales, not on profits, companies will have to pay the full tax even if they are suffering losses, causing many to close.

This tax will also hurt overall job growth. Facing higher taxes, many device manufacturers will shift production away from the painful U.S. tax regime, meaning fewer jobs here at home. According to a report from the Manhattan Institute, this medical device tax could result in the loss of 43,000 jobs and as $3.5 billion in lost wages and benefits.

Patients will be impacted, too. Medical device makers may be responsible for collecting the tax, but they will pass much of the burden of the tax to patients in the form of higher medical costs and lower levels of care. If lawmakers are serious about making health care more affordable for Americans, they wouldn’t enact new taxes that drive up the cost of health care—but that’s precisely what the President’s health care law did.

Americans for Prosperity is proud to support your legislation that repeals this ill-conceived tax, S.232. I urge your colleagues to support this important policy, and I look forward to working with you in the future.

Sincerely,

James Valvo
Director of Policy
Americans for Prosperity

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