Bill Hewlett and David Packard, tinkering in a California garage, began what became Hewlett-Packard. Steve Jobs and a friend built a computer in the California garage that became Apple's birthplace. Bill Cook had no garage, so he launched Cook Medical in a spare bedroom in an apartment in this university town. Half a century ago, in flight from Chicago's winters, he settled here and began making cardiovascular catheters and other medical instruments. One thing led to another, as things have a way of doing when the government stays out of the way, and although Cook died last year, Cook Medical, with its subsidiaries, is the world's largest family-owned medical devices company.
In 2010, however, Congress, ravenous for revenue to fund Obamacare, included in the legislation a 2.3% tax on gross revenue—which generally amounts to about a 15% tax on most manufacturers' profits—from U.S. sales of medical devices beginning in 2013. This will be piled on top of the 35% federal corporate tax, and state and local taxes. The 2.3% tax will be a $20 billion blow to an industry that employs more than 400,000, and $20 billion is almost double the industry's annual investment in research and development.
An axiom of scarcity is understood by people not warped by working for the federal government, which can print money when it wearies of borrowing it. The axiom is: A unit of something—time, energy, money—spent on this cannot be spent on that. So the 2.3% tax, unless repealed, will mean not only fewer jobs but also fewer pain-reducing and life-extending inventions—stents, implantable defibrillators, etc.—which have reduced health-care costs. . .View Full Article