So they say...
This is about the new 2.3% tax on medical devices manufactured here.. the tax is to help provide funding for the ACA.
(note: with more people in our health care system, there will be increased demand
for medical devices; the thinking is increased sales/revenue by companies like Cook can offset the 2.3% tax. tip to Hoosier Al for this info.)
A med-tech company says it's scrapping plans to open five new plants in the Midwest because of the 2.3 percent medical-device tax that goes into effect next year to help pay for the new federal health care law.[snip]
Cook Medical Inc., a Bloomington, Ind.-based company that makes a variety of medical devices, told the Indianapolis Business Journal that the federal tax will cost it between $20 million and $30 million annually.
That's enough to force the company to abandon plans to build five plants over the next five years, said Pete Yonkman, Cook's executive vice president of strategic business unit. Cook recently spent $30 million to renovate a Canton, Ill., plant that was abandoned by International Harvester Corp.
Yonkman said the company will instead look to expand internationally. It already has production facilities in Australia, Denmark and Ireland.
Minnesota politicians and med-tech company leaders have been complaining about the medical-device tax that goes into effect next year and is expected to raise about $2.9 billion per year to help pay for President Obama's new federal health care plan.
Earlier this year, Medtronic Inc. said the tax will cost the Fridley-based med-tech giant as much as $175 million a year. Medtronic Chief Financial Officer Gary Ellis told Bloomberg that the company is trying to figure out how much of the tax it can pass on to its customers.OK, there's something rotten in Denmark here.
“We’re going to have to make the tradeoffs, and there’s probably going to be things that we can’t do as a result of that. It means we won’t have as much to invest going forward," Ellis said.
First, why can't Cook Medical tell us exactly what the new tax is going to cost them annually? Obviously $30 mil is alot more than $20 mil per year. I suspect it's a projection-- based on maybe building the five new plants in the midwest.
two, the Illinois state budget is a mess. If Cook Medical was counting on huge tax incentive from IL and other states where they were looking to build new factories, they're are probably not getting this. Obviously this has an impact on decision making around business expansion over the next five years.
it appears there's more to this than the 2.3% tax.