Research Briefing

As Obama Heads To NIH Today To Defend Failed Economic Experiment, His Health Care Experiment Will Hinder Search For Future Cures And Jobs

RNC CHAIRMAN MICHAEL STEELE: “It is the height of hypocrisy for the president to give himself a big pat on the back for funding government-run health innovations while he supports a huge tax on private-sector health innovations. There is certainly a role for the federal government in medical research. But government should not punish the private sector by taxing new medical innovations and tools that can help improve care and save lives. The private sector isn’t a cash cow the president can use to finance his government-run health care experiment.”

BUT OBAMA’S HEALTH CARE INNOVATION TAX WILL STIFLE SEARCH FOR CURES

Obama-Reid Taxes On Medical Devices Will Make Health Care Services More Expensive. “The medical-device industry is organizing companies that make everything from CT scans to contact lenses to fight a proposed $4 billion annual fee on device makers, arguing that companies across the board could get hit with the fees ... ‘They’re going to get walloped upside the head with a new tax during a struggling economy,’ he [Brett Loper of AdvaMed] said. ‘Hopefully, we can convince enough people that a medical products tax will only increase the costs.’” (Chris Frates and Carrie Budoff Brown, "Medical-Device Makers Launch Blitz," Politico, 9/14/09)

Tax Would Stifle Medical “Research And Development” And “Jeopardize Thousands Of High-Paying” Jobs. “The proposed tax would have a significant and unfair impact on our industry, a worldwide leader in biomedical innovation … Such a rate would dramatically increase our overall effective tax rate, and, in turn constrain resources used for research and development and investment in physical manufacturing capacity. In short, the tax would jeopardize thousands of high-paying scientific and engineering jobs, precisely the types of jobs we must keep and grow in the United States ...” (California Health Care Institute et. al., Letter To Sen. Dianne Feinstein (D-CA), 9/18/09)

Revenue From Tax Would Exceed Amount of Venture Capital Invested In “Life-Saving Medical Treatments.” “In view of these changes, the proposed $40 billion tax [over ten years] on the medical device industry is particularly onerous. Such a tax will sharply cut the resources available for research and development of life-saving medical treatments … The tax also exceeds the total amount of venture capital dollars invested in device companies in 2007 ($3.7B) and on an annual basis, is four times what device companies raised in 2007 for IPOs ($1B).” (Advanced Medical Technology Association, “AdvaMed Statement On Chairman’s Mark,” Press Release, 9/16/09)

WHILE HIS OTHER HEALTH CARE TAXES WILL HINDER AMERICAN JOB CREATION IN TOUGH ECONOMY

Obama’s “Employer Mandate” To Buy Insurance Will Undermine Small Businesses’ Ability To Create New Jobs. “The research and data on the devastating impact of an employer mandate is clear – it is a job killer … hardly what this country needs in these challenging economic times … Adding new, additional burdens to small business owners – especially in the form of an expensive mandate – is not an effective approach to reform. In fact, it burdens the very people we are supposed to be trying to help.” (National Federation of Independent Business, “Health Reform Must Help, Not Harm Small Businesses,” Press Release, 6/10/09)

• And Harm Their Ability To Hire Low-Income Workers. “[E]mployers who do not offer ‘affordable’ coverage to employees would have to help pay the cost of such benefits for their low-income workers ...The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal ‘could unintentionally discourage the hiring of lower-income people,’ by adding a new ‘health surcharge’ to the cost of employing them.” (Jeff Zeleny and Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurers,” The New York Times, 6/23/09)

House Dems’ Large Income Tax Hikes Eat Into Small Business Owners’ Hard Earned Income. “Obama’s plan to raise the top tax rate from 35% to 39%, combined with the health care surtax, would mean top-earning households are keeping 17% less of their income after paying taxes ... High tax rates have serious economic consequences …They also shrink the size of the tax base, raise less revenue than some might think, and overly burden the entrepreneurial sector.” (Robert Carroll, “The Economic Costs Of High Tax Rates,” Tax Foundation, 7/29/09)

• And Less Income Means They’ll Be Forced To Lay Off Many Hard Working Employees. “This [surtax] would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study ... America’s successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world ... “ (Editorial, “The Small Business Surtax,” The Wall Street Journal, 7/14/09)

Tax Increases Will Lead To $76 Billion In Lost Economic Activity In 2011 Alone. “[T]he higher tax rates are estimated to raise $88 billion in 2011, but the economy will incur an additional burden of $76 billion--or ‘deadweight loss’--as a result, which raises the total cost of the tax increases to $164 billion, roughly double what lawmakers intend to raise.” (Robert Carroll, “The Excess Burden of Taxes And The Economic Cost Of High Tax Rates,” Tax Foundation, 8/14/09)

• And Could Lead To Over 450,000 Jobs Lost Over Next 10 Years. “Job losses would mount over time as potential high-income earners forgo job-creating endeavors; By 2019, the economy would offer 452,000 fewer jobs than it would have without the reforms ...” (Karen Campbell Ph.D., "Current Health Insurance Reform Proposals Vs. Real Reform And Economic Growth," Heritage Foundation Backgrounder #2321, 9/23/09)