Friday, November 11, 2011

Obamacare Destroys 1,000 Jobs at Stryker Corp.

What is the medical device tax?

The $20 billion tax was included in the Affordable Care Act that was signed into law in 2010. The amount is based on a 2.3% excise tax that will be levied on the total revenues of a company, regardless of whether a company generates a profit, starting in 2013. Many companies will owe more in taxes than they generate from their operations. The result will be devastating to innovation, patient care and job creation.

EXHIBIT A:

Nov. 10 (Reuters) - "Medical device maker Stryker Corp (NYSE: SYK) said it will cut 5 percent, or about 1,000 jobs to largely offset costs related to the scheduled implementation of the new Medical Device Excise Tax in 2013.

"While it is still uncertain whether the device tax will exist in its current form come 2013, we believe that companies across the space will make moves to mitigate the P&L impact of the new excise tax," Susquehanna International Group analyst David Turkaly wrote in a note.

The maker of hip and knee replacements and surgical products, which expects to save about $100 million from the restructuring, said it will record $85-$95 million of the entire $150-$175 million charge in the current quarter. Stryker expects to complete the restructuring activity by 2012-end."

MP: Should it be any surprise to the Obama administration that we've got a sub-par recovery with weak job creation, when there are massive job-killing regulatory reforms pending in the  form of Obamacare and Dodd-Frank, along with uncertainty about future environmental regulations and future taxes, and anti-job decisions like the delay of the Keystone XL pipeline?

HT: Buddy Pacifico

10 Comments:

At 11/11/2011 1:45 PM, Blogger Michael Hoff said...

Maybe they didn't contribute enough to the DNC to warrant a waiver.

 
At 11/11/2011 1:48 PM, Blogger Benjamin said...

I am no fan of Obamacare. Even direct payments to emergency rooms would be a better idea.

That said, it is a lot easier for private-sector company officials to blame government, rather than themselves, when profits are down.

"We are cutting because we want higher profits to stoke our golden parachutes," is not a statement that endear oneself to employees. How about, "We entered some new markets and met with failure. Ergo, employees will suffer." Or, "We took on a lot of debt in recent mergers. Now we have to cut employee compensation."

It is not only the lying skunks at the Pentagon, or State Department Ms. Rosy Scenario for Afghanistan who tell tall tales. Private sector entities lie also.

 
At 11/11/2011 1:50 PM, Blogger Benjamin said...

All 1066 MF Global brokerage workers laid off
CNNMoney - ‎55 minutes ago‎
NEW YORK (CNNMoney) -- The ax fell Friday for all 1066 employees of bankrupt MF Global's brokerage unit, the trustee overseeing the liquidation of the company announced.

 
At 11/11/2011 2:45 PM, Blogger Buddy R Pacifico said...

There is another revenue generating source for the Affordable Care Act (to Medicare Part B). This source is a fee on the branded prescription pharmaceutical industry as a whole.

The fee on the branded pharma industry starts at $2.5 billion in 2011 and rises to $4.1 billion in 2018. As a further drag on the industry the fee will not be deductible for income tax purposes.

Prof. Perry, can we e-mail you at AEI rather than your Outlook e-mail, for ideas for posting?

 
At 11/11/2011 2:52 PM, Blogger Mark J. Perry said...

Buddy: Thanks very much for posting the information that helped me create this post, I really appreciate it, and I'm always looking for material like that.

The best email for me is the one that is available in my profile on the blog: mjperry at umich.edu

Please feel free to send suggestions and ideas to that email.

 
At 11/11/2011 7:11 PM, Blogger Rand said...

Anyone who really cared about healthcare would not have voted for an excise tax on medical equipment.

 
At 11/11/2011 9:34 PM, Blogger Mkelley said...

Whoever named this monstrosity the "Patient Protection and Affordable Care Act" must have a great sense of humor.

 
At 11/12/2011 3:57 AM, Blogger sethstorm said...

Sounds a bit arbitrary on Stryker's part. I wouldn't mind seeing the data that drove that decision as to see if there was room for the people - no matter how unlikely that will be.

Either way, it sounds like this provision won't be surviving any cuts.

 
At 11/12/2011 8:25 AM, Blogger VangelV said...

That said, it is a lot easier for private-sector company officials to blame government, rather than themselves, when profits are down.

When the government increases the company's costs the government is clearly to blame.

 
At 11/12/2011 10:38 AM, Blogger Paul said...

Benji said:

"We are cutting because we want higher profits to stoke our golden parachutes," is not a statement that endear oneself to employees."

Well, good thing that statement was not uttered by anyone other than the voices in your head.

 

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