On Tuesday, the federal government received their first tax payment from medical device companies to the tune of $97 million as part of the Affordable Care Act, and FOX 9 News spoke to Rep. Erik Paulsen about the impact on jobs.
The law requires twice-monthly deposits of a 2.3 percent tax on device makers' revenue to help pay for changes in the federal health care overhaul -- but it doesn't sit with many people and many lawmakers.
Paulsen has been working to repeal this tax. Watch the video to hear him explain why.
Medical device companies in Minnesota and around the country lobbied extensively to kill the tax before it took effect on Jan. 1, but failed. Industry lobbyists claim that the tax will cost medical technology businesses $667 million to implement nationwide and lead to layoffs or reduced hiring.
Little Canada-based St. Jude Medical has estimated the cost of the device tax at $50 million to $60 million in 2013. Fridley-based med-tech giant Medtronic estimates that the new tax will cost the company $125 million to $175 million annually. These companies say not only will they have to let people go because of this new tax, but it will also take away from more research and development.
Yet, with the added pool of patients coming in, President Barack Obama said it should even out.
"The health care bill is going to provide those health care companies, 30 million new customers. It's going to be great for business and they're doing really well right now," said Obama about the business impact. "They're going to get 30 million more customers as a consequence, so this additional tax essentially comes back to them as new customers."