In a recent article about the delay or repeal of the Affordable Care Act’s medical device tax, an executive of Merit Medical said, “20 percent of this company’s net after-tax profit was sent to Washington, D.C., rather than reinvested in technologies here and growth for our business.”
How much more disingenuous can you get? Taxes are measured against income, not “after-tax profit.” The medical device tax is a 2.3 percent tax on medical device supplies. There is no mathematical logic that calculates it against net after-tax profit. That’s the equivalent of an individual making $500,000, under the Trump tax code, claiming to pay almost 42 percent of their after-tax income in federal tax. It just doesn’t work that way.
The medical device tax was passed to help pay for the benefits of the ACA. Is that unusual? No. We tax gasoline to pay for roads, and property taxes are allocated to specific needs. I’ve been around health care and medical device venture capital for over 30 years and have never heard of a management team determining not to hire or innovate because of tax rates.
Taxes reduce profits — that’s true. If Sen. Orrin Hatch, Rep. Mia Love and her opponent, Salt Lake County Mayor Ben McAdams, want to push for even lower taxes than were just passed in the Trump tax code (which more than makes up for the medical device tax), then make the case. But please don’t do it on the falsehood of lost jobs or innovation.
Josh Kanter, Sandy