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More Layoffs...
Stryker a company that makes healthcare parts like pacemakers is laying off 1,170 employees.
Jon Stryker, who inherited this company, is an Obama fan and also contributed to his campaign as well as another PAC.
Snippet:
"A "medical device excise tax" included in the mandate imposes a 2.3 percent levy on medical device manufacturers and suppliers, which critics say will raise prices on everything from pacemakers to prosthetics to stents. Companies will be required to pay the tax regardless if they have a profit or loss for the year. The tax is estimated to cost the medical device industry $20 billion."
The bolded is pretty disheartening (if it's true). So, if a company can't even make a profit to pay their employees' salaries, they still have to pay tax? That would take away from a company's capital core and base. If the economy went south, which it probably will, then companies will errode from the inside out having to pay taxes even if they do not make profits! If a company has to pay taxes without profits, then to get the money they will have to layoff more people, just to meet their governemnt mandated tax requiremtns. More and more businesses would fail.
Re: More Layoffs...
Romney also predicted he would win. So, yeah. He's not real good at the whole prediction thing.
Also, although Stryker wants to blame these layoffs on the ACA, could the slew of lawsuits the company is facing have more to do with it. I'm always surprised that the conspiracy theorists (Bengahzi!) always so blatantly believe other things without digging. A bit hypocritical, no?
http://www.equities.com/news/headline-story?dt=2012-11-16&val=724208&cat=service
And despite the lawsuits, Stryker is not doing so bad. Share prices just went up.
http://m.cbsnews.com/storysynopsis.rbml?pageType=general&catid=57551185&feed_id=999&videofeed=999
I'm not even saying that the tax won't affect Stryker's bottom line, but I think this shows AGAIN that business owners tend to be in it for themselves and not the greater good, thus strengthening my belief that they should not get special treatment just for being "job creators."
I guess I'm lost on why we are taxing this one specific product/line of products. Aren't most of these types of products sold to non-profits like hospitals and clinics? I mean if we're looking to soak the rich or the people who can afford a little extra shouldn't we be putting an excise tax on things like designer handbags and Starbucks? Just seems to me those are things you could live without if you couldn't afford to pay the tax that will be passed on to the consumer.
Also, as a practical matter these companies don't have rich "owners" per se. Stryker specifically is a pubicly traded company and which means it is owned by it's shareholders (sometimes in large blocks through companies like Vanguard, TRowePrice etc) so it's really owned by people like your neighbors who have it as part of their 401K or IRA retirement portfolio.
Well, lots of hospitals and clinics are for-profits, but that's neither here nor there. The reason that this tax was levied on these products is because expanding coverage to millions more people means a LOT more business for these products. So the logic is that since this industry is going to be seeing a huge expansion in business, they'll be able to afford the tax.
Not saying I agree or disagree - just explaining why it is.
http://www.tnr.com/blog/plank/107878/um-about-medical-device-tax#
Bob DeAngelis, an executive with Katahdin, told me that he had no problem with the tax and didn?t see it having much impact on his 150-person firm. ?I?m not terribly upset we?re going to have a tax on medical devices. I think it?s overblown,? he said. ?Scott Brown says we ?shouldn?t be taxing the job creators.? That sounds great but what does that mean. He?s not talking about me. I?m going to hire based on people buying my product.?
Even more outspoken was Michael Boyle, the founder of a 55-person firm outside Boston, SDI Diagnostics. ?I?m never in favor of paying more tax if it can be avoided,? he told me. ?However, it really infuriates me when politicians say that people won't hire because they have to pay a tax. If your business is growing and you need people to help sustain the growth you?re going to hire. It?s nothing but political sloganeering to say that a tax like this is a job killer. It?s not a job killer. It would never stop a responsible manager from hiring people when it?s time to grow the business.? He went on: ?You bring in millions more people into the health care market and these people are going to use goods and services. My company and every other company, if we operate our business responsibly we are going to share in that. We?re going to give you 10 more in business and take a dollar in taxes, and you mean you won?t hire more people because we?re going to take that one dollar? It makes no sense. It?s nothing but political pandering.?
but a chunk of these manufacturers supply items to a specific market like the elderly which are already covered by medicare. As a provision of the ACA medicare payments have (again) been significantly reduced. These companies are going to make LESS money but be taxed more. Also why are we taxing the device makers only? Why aren't we excise taxing doctors and pharmaceutical companies? Using this same logic they stand to make a ton of money too.
Even without that I disagree that more people will be covered. You might potentially be expanding their possible customer base but I don't think that many more people will be covered. Many companies are taking measures to reduce their number of eligible employees. I know of a local large law firm that has decided to offer their employees raises to cover the premiums and simply pay the penalty for not providing it. Some of those employees might get insurance but some will simply bank it. Not necessarily wise in all cases but it will happen because it is financially wise in some. I no longer have employer subsidized health insurance so we are dropping our private insurance as a family in 2014 and going to pay out of pocket. It will make WAY more financial sense to do so. If we need some kind of expensive care we will simply apply at that point since we can't be turned down nor are they allowed to charge us more premium than off of a certain scale. Currently our health insurance runs close to $20K per year for a healthy family with no major medical conditions. We come nowhere close to using that amount. Last year I think we used about $500. Why on earth would I pay for insurance? What doees paying that monthly premium do for me?
I think it might hurt older employees as well as they really make the premiums in a company pool jump so I think companies might be more hesitant to hire them. It's really hard already right now for someone who is in their late 50s to get a job and this will not help
well the 10 more in business vs 1 in taxes analogy doesn't really work and makes me wonder how involved he is in the day to day grind of his company.
ie: That 10 more in business requires more employees probably when you look at it over maybe 10,000 more in business requiring the hiring of a new employee. However that employee is not free so let's say that employee makes $10 per hour (just for simple numbers). While that employee pays his 15% out of his check for his taxes, there is another portion that the employer pays in payroll taxes out of his own pocket that the employee never even sees and most don't even know about. Let's say that's around 25% a $10/hr employee costs the employer $12.50 per hour in wages. Most BC/BS plans around here require that the employer pay at least half of the insurance premium on behalf of the employee. Now that employee is costing the employer another $400 a month. That employee is now up to costing you $15 per hour. Employees need space and supplies right? So now you need to pay rent on a larger space, buy computers, expand phone systems, etc. More employees also means your workers compensation premiums go up and your unemployment insurance premiums increase. There are also things like employer matched 401K plans, profit sharing, pensions, etc. Which cost another few dollars an hour per employee. You'll also need to hire someone to deal with compliance issues for the new tax law so it doesn't just cost you the 2.3% but actual payroll hours for a whole other employee. We have a small office here and we spend an average of 4 hours per week just on taxes (organizing information, preparing reports, etc).
When you look at all of that you can see why employers frequently make do with what they have got for as long as they can because it's crazy expensive to hire new people even beyond their salary. In order to hire a $40K/ year employee you have to have something like an additional $65K+ in revenue just to break even much less make a profit. However an additional 65K in revenue also subjects you to more income taxes so you go back negative a little bit.