BOLLING: Last thing we need: Obamacare's taxes
Higher business expenses will hamper innovation and cost jobs
Tuesday, July 10, 2012
Lt. Gov. Bill Bolling
The Washington Times
The Supreme Court has upheld Obamacare's mandate penalty as a tax, rescuing it from the ash heap of unconstitutionality. Legal scholars will continue the argument over the constitutional issues for years. But wherever one comes down on the legal niceties of the health care overhaul, Virginia is still staring down the barrel of a fully loaded gun. For tucked in the bill's 2,700 pages are a number of provisions that, as they go into effect beginning in 2014, will be a disaster for the economy of Virginia and for the American health care system.
One such provision is the special excise tax Obamacare imposes on medical-device manufacturers. The manufacture of medical devices is one of the most dynamic sectors of our economy. A range of small and large companies has been one of the major engines of progress in the development of less expensive and more effective means of medical treatment. We owe to those device manufacturers impressive technological advances in everything from the development of noninvasive surgical techniques to improved dialysis machines that vastly improve the quality of life of patients suffering from kidney failure.
Obamacare will bring all this progress to a grinding halt. The tax it imposes is on revenues, not profits. This is a critical distinction. What it means is that startup companies will have to pay taxes on sales of their products even before they are profitable. It therefore is a tax that will make profitability far harder to reach, which in turn will dry up the investment capital that has been fueling advances across this sector.
As Alex Lukianov, CEO of NuVasive, an innovative company in this field, wrote recently, "I can confidently say that if this tax were in place 13 years ago, NuVasive would not be here today. Thousands of jobs would never have been created, and hundreds of thousands of patients would be worse off."
With many Democrats joining in, the House of Representatives already has voted to repeal this job-killing tax. It will vote again Wednesday. The Senate has yet to act, but now that the Supreme Court has ruled, it is imperative that the Senate follow suit and prevent the self-infliction of this particular wound.
But some other wounds will be far larger. President Obama and then-House Speaker Nancy Pelosi promised Obamacare would cost somewhat less than $1 trillion. A trillion dollars is no small sum. But here we are in the third year of Obamacare, and the estimates already have risen to $2 trillion. To pay for this, Obamacare imposes taxes on individuals, health plans and health insurers. The president promised Obamacare would bring down the cost of insurance, but the government's own estimates suggest that the law would increase the cost of insurance by more than $2,000 per family. On top of that, it is estimated that it will cost Virginia $2.1 billion from 2014 to 2022 to cover new Medicaid enrollment under the plan.
At a moment when the economy is struggling, Obamacare is the last thing the country needs. Our medical system is badly in need of reform, but it is not in need of an ill-thought-out policy reform that grants Washington power over one-sixth of the economy.
The struggle to put something in place of Obamacare will now move from the courts to the voters, and that is for the best. We can only hope the country will settle on a more sensible health careapproach and find solutions, much like those recommended by Mitt Romney, that are affordable for the country and actually work to empower consumers, lower costs and improve the quality of American medical care.
Bill Bolling is the lieutenant governor of Virginia. He also serves as the commonwealth's chief jobs-creation officer.
For additional information contact Ibbie Hedrick at 804-225-2487 or email@example.com.