Wednesday, April 3, 2013

For Frank Spahn, the tax on medical devices that kicked in this year as part of President Obama’s health care law is proving to be a jobs killer.

Mr. Spahn, chief financial officer at Signus Medical in a suburb of Minneapolis, said by the end of this year he expects to have paid between $100,000 and $150,000 under the new tax — or roughly the salary of an employee in their sales division.

In fact, the company has laid off one person in sales.”It hurts an industry that was actually producing nice-paying jobs,” Mr. Spahn said Wednesday.

Small manufacturers and distributors of medical equipment are chafing under the new tax, saying they can no longer invest in their once-innovative firms and may resort to layoffs because of the 2.3 percent tax on everything from pacemakers to artificial joints.

Now, lawmakers from both parties are looking for ways to ax the tax — just as they did two years ago when they repealed a business expensing requirement that was part of the health law, but which small businesses said created a paperwork nightmare.

Mr. Spahn said he was among company representatives who met with his congressional delegation, Democratic Sens. Al Franken and Amy Klobuchar and Republican Rep. Erik Paulsen, to air concerns about the tax.

The Senate late last month held a nonbinding vote to express opposition to the tax. The vote was 79-20, with 32 Democrats joining the chorus of lawmakers who want to eliminate the tax.

Mr. Franken and Ms. Klobuchar were among the Democrats voting to end the tax, and they have been particularly vocal in their opposition to the seemingly obscure revenue-raiser from Capitol Hill.

For Mr. Spahn, relief can’t come soon enough.

He said Signus is known for its spinal products and had about 20 employees at its peak but now has about 10. If nothing is done about the tax, he said, “It will decline even further.”

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