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Medical device taxes start in Jan.

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posted on Dec, 6 2012 @ 06:14 PM
As if we didn't have enough kicking in for the new year, add one more log to the bonfire of economic pressures to 2013. Hmmm

(Reuters) - The U.S. Internal Revenue Service on Wednesday released final rules for a new tax on medical devices, products ranging from surgical sutures to knee replacement implants, that starts next year as part of President Barack Obama's 2010 healthcare law.

The 2.3-percent tax must be paid, effective after December 31, by device-makers on their gross sales. The tax is expected to raise $29 billion in government revenues through 2022.

The thing about the over 70,000 pages of the U.S. Federal Tax code isn't the literal personal income tax rate or the corporate income tax rates. It's more about the little taxes that make up those 10's of thousands of pages.

In one potentially problematic aspect of the tax, companies selling dual-use products to medical and non-medical customers must pay the tax on those products, potentially putting them at a competitive disadvantage, said Lew Fernandez, a director at PricewaterhouseCoopers LLP and a former IRS official.

Now one way to look at this is that those big medical device makers can afford the 10's of billions in new taxes. Well, I'm sure they can. I'll bet they afford it even better when they raise the prices of every device they make by 2-5% though. I'll say 5 because business never seems to raise prices ONLY the degree it takes to offset a new tax to the consumer directly. They always pad a little on top.
I hope it's not too hard on those using medical items which are regularly rotated.


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