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Progressive Politics in Minnesota, the Nation, and the World

Transportation in the Hands of New Commissioner Charlie Zelle

Category: Transportation
Posted: 12/12/12 12:26, Edited: 12/12/12 13:35

by Dave Mindeman

Governor Dayton has appointed Charlie Zelle as Transportaion Commissioner...and I think that was a wise choice.

This is nothing against Bernie Arsenau who was serving as acting Commissioner. If he had been appointed, it certainly would have been a fine choice as well.

But it really is time to bring in someone from outside the MnDOT culture to look at everything with new eyes. Innovative eyes.

A St. Paul native, Zelle has run Jefferson Lines, which provides travel services in 13 Midwestern states, for more than 20 years. The company serves more than 60 Minnesota cities and specializes in connecting rural areas to destinations across North America.

Operating bus lines is a challenging operation, but it also gives one the opportunity to look at transportation from a ground level. This will be Zelle's advantage as he takes over Minnesota's transportation system.

For far too long, MnDOT has had a revolving door of staff moving to clients and sometimes vice versa.....which has actually stifled innovative thinking.

But Zelle may be what is really needed. I found this quote very encouraging....

?Bold investment in transit attracts business,? Zelle said. ?We see transit as critical to retain employees and businesses.?

Zelle understands the needs and the challenges. Now that he has been appointed, we will see if he can deliver.
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Medical Device Tax: It Needs To Stay in the ACA

Category: Economy
Posted: 12/12/12 00:17, Edited: 12/12/12 13:35

by Dave Mindeman

I'm afraid Minnesota Senators Klobuchar and Franken are fighting an unecessary fight when it comes to the Medical Device tax that is involved with the ACA.

That puts them squarely in the Erik Paulsen camp along with the device makers like Medtronic.

Democratic Senators Amy Klobuchar and Al Franken pointed to thousands of high-paying jobs that device companies support in Minnesota, headquarters to such giant devicemakers as Medtronic and St. Jude Medical. The industry has painted the tax as a job killer that would hurt innovation.

The "industry" has continuously put job-killer as the sole adjective that describes this tax. Obviously they have convinced Minnesota politicians that this is the case.

Yet, I have never seen or heard an explanation as to how this happens.

This is an excise tax. The tax is 2.3 percent of the sale price of the taxable medical device. The manufacturer pays the tax, however, there is little reason to think that the tax will not be passed along into the cost of the device. The consumer will probably not pay the tax in any event. This is a cost that will probably end up as an insurance mark-up cost.

Now, the arguments coming from the medical device industry say that this will cost jobs. My question is how?

Here is how the industry portrays this....

Businesses, including many in Minnesota, have complained that the government is unclear about how to figure the amount of tax companies must pay. They also complain that paying the tax on gross revenue rather than profits is unfair and burdensome to small companies just getting started.

The closest equivalent to this situation is the Minnesota provider tax that helps fund Minnesota Care. The tax is about 2% and is applied to all medical supplies and prescription drugs. Wholesalers charge the tax when invoices are sent to hospitals, pharmacies, etc. That extra 2% is absorbed into the cost of the item. When the supplied item is used for a patient, the tax is absorbed into the cost of the billing and is paid by insurance or ends up in the patient's deductible.

It hasn't killed jobs. It has not hampered innovation.

Another point/counter point:

Supporters of the tax believe health care reform will add millions of new patients, bringing medical device companies millions of new users and thus new income.

Franken countered that the majority of medical device users are over 65 and are already covered by Medicare. The patients added under health care reform won't increase the devicemakers' market shares significantly, he said.

Yes, Senator Franken is correct that a majority of the users of these devices are already covered under Medicare. But there is still a significant number of new insurance users, (probably those of the ages 50-64), that will increase the number of devices sold under the expansion of coverage via the ACA.

The medical device industry WILL see gains. They will not be reducing innovation. And they would be foolish to decrease employment when demand increases.

If the Medical Tax is repealed (and remember it has already been cut in half by previous lobbying efforts), then the revenue will have to be made up somewhere else. Other places that potentially can't afford to contribute this type of tax revenue and won't have such a large potential for recoupment.

My view is that we have to stop the automatic inference that any tax is going to cost us jobs. I do not see that happening in this case and I still challenge the industry to prove it.
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