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Paulsen Says Device Tax "Onerous" - Industry? Not So Much

Category: Erik Paulsen
Posted: 04/09/13 17:35, Edited: 04/11/13 10:49

By Dave Mindeman

Word of the day: Onerous

ONEROUS (DEFINITION): Unreasonable, oppressive, or cruel, or excessively trying condition, duty, or task whose disadvantages or costs outweigh its advantages or benefits.

Let's use onerous in a sentence....

"Last year, the House overwhelmingly passed legislation repealing the tax, and I'm confident we'll do so again," (Rep. Erik) Paulsen said in a statement. "Now it's time for the U.S. Senate to follow the House's lead, vote to repeal this onerous tax, and ensure the continued leadership of American medical device manufacturing."

Rep. Paulsen has used many words to describe the Medical Device Task....none of them complimentary. But to use "onerous" as his newest adjective is another stretch.

What is especially inconsistent is that Paulson's remedy via his House Republican colleagues is to repeal the tax and replace its $30 billion in revenue with cuts to the health care subsidies which will allow the uninsured to get affordable care.

In other words, another indirect attack on the Affordble Care Act. Because Medical Device manufacturers have a large presence in Minnesota, Paulsen has been able to convince the Minnesota delegation that this "onerous" tax is hurting this industry.

But in what way? What is the "onerous" result? After all, the tax is in effect. It has been since January 1st. Outside of layoffs that were already planned from last year for these companies, where are the cutbacks?

What is particularly interesting is the results of this survey done by the Emergo Group analyzing the outlook of the industry itself:

The 2013 Medical Device Industry Survey was conducted in January 2013, with a total of 3,509 respondents. Only one response per person was allowed. Survey questions were emailed to an in-house list maintained by Emergo Group. A publicly available online link to the survey also solicited responses from industry via social media channels.

Due to the nature of our business, QA/RA professionals make up a much higher percentage of respondents than they would otherwise represent in the industry. Some results should be interpreted bearing this in mind.

Question: When you think about the overall business environment for the medical device industry, which statement best describes your personal outlook for 2013?


Only 12% of the industry has a negative outlook for 2013. 71.1% had a positive outlook. And yes, the Medical Device Tax is currently in effect.

Rep. Paulsen, please tell us what is "onerous" about that?
comments (6) permalink
06/02/15 23:21
UPDATE : the new word is "burdensome" ... that's what Erik Paulsen used in his press release announcing the House Ways and Means Committee approval of H.R. 160 by a vote of 25-14. There are 15 Democrats assigned to the committee ... so my gut tells me that a majority of Democrats want an offset for the $26.5 Billion tax cut.
05/28/15 10:20
FYI : Erik Paulsen told the Minnesota MedTech Investor Conference that the Ways and Means Committee will discuss "packaging" the tax repeal in a meeting on June 2.

I wonder if anyone will mention that SEC filings indicate 13,763 jobs created by top medical devicemakers ?
09/21/14 23:15
FYI : Did you read the EP Vantage report on Medical Device industry jobs ?
Excluding spinoffs, of the top 15 companies, they averaged in INCREASE of 6% job growth.

BTW ... did you hear Erik Paulsen's floor speech last week ... visit the MN Political Roundtable and read Paulsen Warns that Medical Device Tax Could Cost 132,000 Jobs
They voted to repeal the "onerous" tax as part of a larger bill ... the cost $573 BILLION ... then they voted to take time off to raise campaign donations.
04/26/14 22:50
FYI : New posting on the MN Political Roundtable

Question : With the Zimmer buyout of Biomet and medical device companies repeatedly beating earning estimates, why is Congress considering repealing this as part of the "tax extenders" legislation ... the House will vote on this in May.
08/21/13 23:44
FYI : New posting on the MN Political Roundtable

Data according to EvaluateMedTech, the top 15 device makers by market cap actually increased their headcounts by an average of 4% during 2012.
The medtech tax will bite over the course of 2013, but staffing trends show that it has not scared device manufacturers away from expanding. The medical device sector might not have expanded as fast as big biotech, and the full picture will not become apparent until a year from now, but claims that medtech companies would have to slash jobs to cope with a 2.3% reduction in sales appear to have been wide of the mark.
04/10/13 19:20
besides the one survey that you cited, there was another released just last week.
(see link: http://mnpoliticalroundtable.com/2013/04/06/are-surveys-or-facts-switching-paulsens-strategy-on-medical-device-tax-repeal/)
The industry message is the same ... they still see growth, but just not as much.
Interestingly, this week, I received the Annual Report for my investment in Zimmer which is one of the companies that Paulsen cited. The report talks about how the tax will be treated and mentions "offset the tax with cost savings from our operational excellence initiatives" ... which they expect to incur $120-130 million in expenses in 2013 ... the MDET cost is anticipated to be $10-15 million per quarter, so obviously, the MDET has no relation to any layoffs. Zimmer also expects to "continue making investments in R&D at approximately 5% of sales.



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