Medical device tax ‘a threat’
Fort Wayne Journal Gazette
17 Aug 12
U.S. Senate candidate Richard Mourdock warned Thursday that a medical device tax that takes effect next year could cost 2,100 jobs in Indiana and deter future investments by device manufacturers.
“It’s a real threat to their businesses,” Republican Mourdock said about the 2.3 percent tax on device sales, which will help fund the nation’s new health care law.
He and Rep. Marlin Stutzman, R-3rd, spoke against the tax and the health care law during a news conference at Greatbatch Medical’s new plant on Fort Wayne’s northwest side.
Greatbatch Medical, which designs and manufactures components and instruments for orthopedic device makers, this summer opened a $17.5 million plant along Kroemer Road near U.S. 30. The operation, which employs 125, moved to town from a rented facility in Columbia City.
The looming tax, approved by Congress in late 2009, apparently did not dissuade Greatbatch Medical’s local investment.
“That’s true. As Marlin said, they’ve actually put steps in place to bring some of their operations from Europe in this direction – but why are they doing that? It’s because of the tax environment in Europe,” said Mourdock, the state treasurer.
“If the taxes that are chasing those types of businesses, those types of jobs, out of other places, if (those businesses) are going to come here, but then we see a tax structure that starts to mirror those in Europe, what good have we sent?”
Asked whether Greatbatch Inc., based in Buffalo, N.Y., is shifting the work to Fort Wayne because of high taxes in Europe, company spokesman Chris Knospe said in a phone interview, “Not specifically because of high taxes, no.”
“There have been a lot of things that led to the decision to make the consolidation” affecting Swiss operations, Knospe said, citing fluctuating currency exchange rates and Europe’s economic downturn.
The U.S. tax is levied on the company that sells the medical device, meaning Greatbatch Medical won’t have to pay it. However, Knospe said, “Because our customers are being affected by it, in turn we’re going to be affected by it.”
Stutzman noted that Stryker Corp. of Kalamazoo, Mich. – a Greatbatch Medical customer – is blaming the tax for 1,000 layoffs. And Mourdock said Cook Medical Inc. of Bloomington has cited the tax for its decision to suspend plans to build five more plants.
“These large companies, if they can’t absorb (the tax), what is it going to do to a smaller company that is building medical devices?” Stutzman asked.
Sen. John Thune, R-S.D., was supposed to join Stutzman and Mourdock for the news conference. Weather conditions delayed his flights from Sioux Falls.
Thune and Mourdock traveled later to Warsaw to meet with leaders of the city’s orthopedics industry, which employs 13,000.
“This really is a spectacularly successful industry,” Thune said in a phone interview after the meeting. “We want to have policies in place that will encourage that and not discourage it, and right now what they are getting from Washington are more taxes, more regulations, a lot of things that make it more difficult for them to do business and create jobs and continue to provide cutting-edge technology.
“People today said, ‘You know what? We’re going to continue to invest because we think eventually you guys are going to do the right thing and repeal this tax’ … I wish I had that much confidence,” he said.
“The only way that happens is if (Republicans) get the majority back and we have an opportunity to roll back some of the damage that’s been done through Obamacare, and that means that we’ve got to get people like Richard Mourdock elected to the Senate,” said Thune, the third-highest-ranking Republican in the Senate as the party’s conference chairman.
Republicans have firm control of the House, while Democrats have a 53-47 majority in the Senate. Thirty-three Senate seats are up for election this year.
The House in June voted to repeal the medical device tax, but the Senate has not considered the legislation.
Thune – who reportedly had been one of Mitt Romney’s prospective running mates – was scheduled to attend a private fundraising reception for Mourdock on Thursday night in Warsaw. Mourdock declined to say who the host was.
Mourdock defeated Sen. Richard Lugar, R-Ind., in the Republican primary election and faces Rep. Joe Donnelly, D-2nd, in the Nov. 6 general election.
Donnelly voted in favor of the health care law in 2009, but he voted for the repeal of medical device tax.
“He voted for (the tax) before he came out against it,” Mourdock said. “You cannot send a message of inconsistency if we want our businesses to be growing.”
Donnelly campaign communications director Elizabeth Shappell said in an email that Donnelly co-sponsored the tax repeal bill.
“Richard Mourdock is misleading Indiana voters by linking Joe to a tax he opposes,” she said. “Mourdock is trying to distract voters from the fact that he has questioned the constitutionality of Medicare and Social Security.”