R&D, jobs bear the brunt of Affordable Care tax

I’d like to pass along information about a new report having to do with the 2.3 percent medical device tax in the Affordable Care Act. It proves that research and development spending has dwindled to a trickle in this sector since this tax was passed. This tax is a 30 percent tax surcharge for average companies, but because it’s a tax on gross sales, it can claim all the profits for companies that are in a competitive segment or companies that have thin profit margins. 

In short, it is the dumbest tax in the history of public policy.

{mosads}The EvaluateMedTech 2015 report offers a staggering example of how most companies have cut R&D to pay for this tax. Other firms, about 10 percent of U.S. companies, according to a recent Emergo report, slashed payroll and laid off workers. The tax went into effect on Jan. 1, 2013.

According to EvaluateMedTech, which based its findings on 300 publicly traded companies, the precipitous drop in the growth rate of R&D spending started in 2012, from 9.6 percent in 2011 to 2.5 percent in 2012 and hit a trough at 0.6 percent in 2014. Because only a fraction of companies in this space formed the basis for this study, the harm is actually far worse when private firms are included.

So what does the harm look like? Assume a total of $1.8 billion collected from U.S. firms between January 2013 and January 2015. That’s the equivalent of 30,000 jobs that might have paid $60,000 each — a starting medtech job. 

Innovation that does not happen leaves no footprint, but now it’s clear that jobs were bled from company balance sheets. Because a $60,000-a-year job creates three other jobs in local communities, in all, 120,000 jobs have not been created thanks to this tax.

From John Eckberg, director, media relations, Cook Group, Inc., Bloomington, Ind.

Atlantic coastal states have a chance to join the energy renaissance that has made America a world leader in oil and natural gas production, which supports millions of jobs across the country (“East Coast leaders tell Obama to reject offshore drilling in Atlantic,” The Hill’s Contributors Blog, Nov. 19). The federal government’s decision to allow new seismic surveys in the Atlantic is a welcome first step. These surveys are the best way to safely explore for oil and natural gas offshore.

William Brown, chief environmental officer with the Bureau of Ocean Energy Management, has stated that claims against seismic surveying are “wildly exaggerated and not supported by the evidence.” Surveyors take great care to protect wildlife, and the best science and decades of experience prove they pose no danger to marine mammal populations.

Offshore energy development is safer now than ever before, according to congressional testimony from the co-chairmen of the Presidential Oil Spill Commission, who applauded our industry and the government for working together to enhance standards, regulations, spill prevention and response capabilities.

A majority of voters in states from Virginia to Florida support offshore energy exploration, with support reaching 71 percent in the Carolinas. Their voices should matter at least as much as a vocal minority in determining whether Atlantic states take advantage of their valuable opportunity to create jobs while contributing to our nation’s energy security. 

From David McGowan III, executive director, North Carolina Petroleum Council, Raleigh, N.C.