Analysis: Medical device tax revenues could top $2B next year

March 28, 2012 by MassDevice staff

A analysis shows that the medical device tax set to go into place next year could generate significantly more revenue than the $2 billion a year the Obama administration projected.

MassDevice broke down the wildly disproportionate effect the tax will have on company profits. Click here to access the interactive graphic.

AdvaMed's analysis concluded that the industry directly employs more than 400,000 in the U.S., and that "under reasonable assumptions, the tax could result in job losses in excess of 43,000 and employment compensation losses in excess of $3.5 billion."

The figure came from an economic analysis commissioned by AdvaMed and conducted independently by Diana Furchtgott-Roth, senior fellow at the Manhattan Institute, and Harold Furchtgott-Roth, former chief economist of the House Commerce Committee.

"We are not in a strong economic position," Diana Furchtgott-Roth told media during a September conference call when the report was released. "This is not the right time to impose a new tax."

The threat of 43,000 U.S. jobs lost became a rallying cry among industry supporters protesting the tax, including med-tech advocate Rep. Erik Paulsen (R-Minn.) who cited the figure in a letter, with 74 co-signers, sent to House leaders last month.

Medical device executives and related lobbies also used the estimate liberally, especially as companies such as Zimmer (NYSE:ZMH) and Stryker (NYSE:SYK) began announcing layoffs in efforts to cut costs ahead of the tax. But Bloomberg's Flavelle cast a wary eye on the industry report, chiding it for exaggerating the impacts of the levy without enough solid evidence.