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Tiberi/Paulsen Column: Tax Will Thwart Innovation


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The president gave a passionate speech at his party's convention this month, and he touted several ideas on how we can improve our economy. We agree it is crucial that small business and entrepreneurs lead the way to strengthen manufacturing and increase exports in the United States. The good news is that we already have a dynamic industry that addresses all of the ideas the president touched on, and it has grown over the years in Ohio, creating jobs along the way. The bad news is that one of President Barack Obama's own policies is a major roadblock for the industry's continued success. If we don't fix it, a proud American industry could lose its leadership position.

America's medical device industry is the global leader in innovation, job creation and patient care. From wheelchairs and braces to pacemakers and defibrillators, this dynamic industry is responsible for many of the cutting-edge technologies that save lives every day and improve our quality of life. Many people don't know that the industry is overwhelmingly made up of small businesses, with more than 80 percent of companies having fewer than 50 employees. Not only are we the global leader in this field, but it is one of the few areas where the United States exports more than we import.

These companies are started by entrepreneurs who dedicate their lives to improving the human condition, and when successful, lead to high-paying manufacturing jobs. In Ohio alone, medical device innovators are responsible for nearly 47,000 jobs. Ohio's med-tech job multiplier factor guarantees that for every job in Ohio's medical technology sector, 2.9 additional jobs are created as a result. These jobs are responsible for nearly $500 million in payroll and $2.8 billion in sales for Ohio.

Unfortunately, as a part of the Democrats' health care law, a 2.3 percent, $30 billion excise tax was imposed on medical device innovators in Ohio and across the country. It will apply to countless devices that have revolutionized how health care is delivered and increased life expectancies.

This onerous policy applies to revenue, not profits. We know of dynamic, cutting-edge medical device manufacturers in our districts who employ dozens of workers, but aren't profitable yet. Are we really going to tell these innovators that they owe a tax bill to the Internal Revenue Service when they have not yet made a penny of profit?

Everyone agrees that we need to rein in health care costs while continuing to spur innovation. This is a complex challenge for America's health care providers and innovators, but we are up to the task. At the same time, if our goal is to reduce costs, does it really make sense to add taxes to life-improving and life-saving products that improve the quality and delivery of care?

Let's hope the president and our colleagues in the Senate recognize that the medical device tax will thwart innovation, job creation and patient care.

Thankfully, Ohio's congressional delegation helped to lead this fight in the House of Representatives where a vote to repeal the device tax was overwhelmingly approved with strong support from both parties this summer. After all, stifling innovation and job creation is a prognosis that no one can stomach in today's economic environment.

U.S. Rep. Pat Tiberi represents Ohio's 12th Congressional District in the U.S. House of Representatives. The 12th District is made up of Delaware County and portions of Franklin and Licking counties. Tiberi chairs the Ways and Means Subcommittee on Select Revenue Measures.

U.S. Rep. Erik Paulsen represents Minnesota's 3rd Congressional District in the U.S. House of Representatives. Paulsen is a member of the Ways and Means Committee.

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