Medical Technology Caucus
Floor Speech
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Mr. YOUNG of Indiana. I thank the gentleman from Minnesota for his leadership and I certainly share your desire to lighten the burden on this high-value-added industry. We need to ensure that all of the manufacturing jobs, all of the job and economic growth opportunities that we can help create an environment for, a nurturing environment for, that we do.
One thing that I hear as I travel around southeastern Indiana and listen to my constituents, there's a lot of feedback about the level of uncertainty within our economy. There's regulatory uncertainty, there's uncertainty about future tax rates, and there's uncertainty about energy rates and health care costs. And so these medical device manufacturers are certainly laboring under the burden of uncertainty with respect to the FDA regulatory process. And then here we add an additional excise tax to their bottom line. And so I'm happy to support H.R. 436, which would lighten that burden.
I don't think probably many people appreciate--I certainly didn't appreciate it until I started looking into it--exactly how burdensome this device tax could be on the medical device industry. The tax is 2.3 percent of gross sales. So that's a top-line tax before all the other deductions and costs come out. So, essentially, that would translate into about 15 percent taxation on profits of many of these medical device companies. You add that 15 percent profit tax to 35 percent corporate tax and the 5 percent tax when you add together the State and the local corporate tax burden, and you're north of 50 percent of tax on profits. So it's no wonder that so many of these device makers are instead deciding to expand their operations or start up new operations overseas. And we have to do what we can to prevent that.
Now, in my home State of Indiana, approximately 40 percent of all life sciences sector jobs are related to this devices industry, this high value-added industry that improves the lives of so many patients and certainly all the workers who work at these companies. My district, in particular, has some employers that we'd like to keep around, like the Cook Group in Bloomington, my hometown. And then as we head further south to Jeffersonville, Indiana, we have MedVenture. And there are people everywhere in between that work at this company.
The tax impact is going to burden not just the large companies, however. There are 300-plus FDA-approved medical device manufacturers in the State of Indiana. And as my colleague from Minnesota just indicated, they're all searching for financing. They're searching for venture capital to bring their fledgling operations to the next level. So a Cook Group could probably weather this storm and figure out some way to remain profitable, but it's the next Cook of the world, the next tinkerer in their garage or their spare bedroom that may not be able to grow their business and create the jobs that our constituents are all demanding should this device tax go into effect January 1 of next year as it's currently scheduled to do.
The regulatory challenges which I've already mentioned are also very important. They must be addressed separately. I know there's separate legislation out there to do that, and I will be supporting that initiative as well. But the bottom line here is that there are jobs at stake and there are people's lives at stake as well.
We heard very powerful testimony from Sheila Fraser. Her name has been mentioned here before. She is an outstanding young lady, a high school student, who at a very young age contracted cancer, and she was going to have to have her leg amputated. And because of the ingenuity and the entrepreneurship of people in my home State of Indiana, they were able to put together a company and sell these products and develop a product that benefited Sheila Fraser directly. And now she's living a very productive life, and she has both of her legs, thank the Lord. And we need other people to benefit from similar sorts of innovations in the future.
I am most proud to be here to speak on behalf of H.R. 436. I urge my colleagues to sign on to this legislation and to vote in favor of it.
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