As part of the negotiations over the fiscal cliff, Congress and President Obama are battling over whether to raise marginal tax rates at the very top of the income ladder.
Regardless of how these talks turn out, millions of Americans are already facing tax hikes thanks to Obamacare.
Obamacare’s authors chose to offset about half of the trillion-dollar cost of the law through higher taxes. Since the Supreme Court upheld the law’s individual mandate and allowed states to opt out of its Medicaid expansion, though, the cost estimate has swelled to $1.76 trillion between 2012 and 2021.
In 2013, a number of Obamacare’s taxes will go into effect. Each will increase the cost of health care, yield job losses, and deprive our struggling economy of investment. These are the true costs of Obamacare.
Let’s look at some of these taxes individually.
On January 1, 2013, a 2.3-percent excise tax on the total revenues of medical-device companies — regardless of whether they turn a profit or suffer a loss — will take effect. The tax will hit everything they sell, from x-ray machines and pacemakers to surgical tools and artificial hips. The levy could extract as much as $29 billion over the next 10 years.
That money will have to come from somewhere; device firms won’t simply swallow the tab. So they’ll likely raise prices for patients and slash their workforces. In fact, economists at the Manhattan Institute project that the tax could eliminate as many as 43,000 jobs — and over $3.5 billion in employee compensation.
The industry currently employs about 400,000 people and supports roughly 2 million manufacturing jobs. With unemployment — particularly in the manufacturing sector — still a national concern, it makes little sense to penalize device firms.
Because of the tax, medical-device firms will also have less money to invest in research and development. My colleague Benjamin Zycher estimates that the industry will scale back investment in new products by 10 percent through 2020. That translates to a $2-billion decrease per year.
House Republicans have been trying to repeal the tax for some time. In recent weeks, they’ve gotten some unlikely company — from Senate Democrats.
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