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Schock Legislation Repeal’s Tax Increase on Illinois Employers

Illinois Communities Confront Harsh Realities of another ObamaCare Tax

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Washington, Feb 8, 2013 | comments
Congressman Aaron Schock (R-IL) is not letting down his fight to stop a tax increase that will have an impact on employers in communities like Canton, Illinois. Effective January 1, 2013, the Affordable Care Act imposed a 2.3 percent excise tax on the manufacturing of certain medical devices. Schock, a member of the House Ways and Means committee, has signed on to co-sponsor the Protect Medical Innovation Act, H.R. 523, a bipartisan proposal to repeal the excise tax increase. Schock helped lead a similar bipartisan effort in 2012, which passed the House, but ultimately failed to be voted on in the Senate. 

“Over 1,200 Illinois jobs are now at stake because this tax increase was allowed to become effective. It’s unconscionable to think with the information we have available about the economic impact and the potential jobs lost, action would not be taken to repeal this tax increase,” said Congressman Aaron Schock. “Since 2008, Illinois has lost the 3rd most jobs in the country. In the six months following Illinois’ 67 percent income tax and 30 percent corporate tax increase, Illinois led the nation in job loss. It’s becoming more clear every day that the failed tax-and-spend policies on the state and Federal level are not working, and employers and households are paying the ultimate price.”

Over 400 organizations, companies and manufacturers, including twenty in Illinois, representing hundreds of thousands of medical technology jobs wrote Congress in 2012 urging for the repeal of the medical device tax. In the United States, there are more than 8,000 medical device companies, employing nearly half a million Americans. Canton, Illinois is a text book example of a small Illinois community facing the adverse impact of the tax increase on medical devices. 

In May 2011, Cook Polymer Technology, a raw materials manufacturer, announced it was expanding its operations by opening a new plant in Canton. The Canton facility, which is now fully operational, has provided a much needed jolt to the local economy and the creation of 100 new jobs. However, with the tax increase on the products the facility manufacturers, such as highly specialized polytetrafluoroethylene (PTFE) tubing widely used by the medical community, there is concern that their ability to grow locally and reinvest in the Canton community will only become more restricted because of the new medical device tax. 

“U.S. employees and patients are going to suffer unless a punitive 2.3 percent excise tax on gross sales is repealed.  Already, we’ve seen thousands of U.S. manufacturing jobs lost as companies offset this lost revenue,” said Steve Ferguson, chairman of Cook Group. “Cook recently built two manufacturing facilities in Canton, Illinois, and we are excited by the progress we are seeing in this hard-working, rural community. However, Cook has had to shelve plans for future plants elsewhere in the U.S. because of this tax. This tax cannot be passed on to our customers and will not be made up by increased revenues from new patients. Unless Congress passes the bipartisan legislation proposed by Reps. Schock, Paulsen and Kind to repeal this measure immediately, it may be too late to protect one of the few domestic manufacturing sectors where America still leads the world. And that decline would seriously jeopardize both job growth and patient health in the U.S.”

Medical Device Tax Background Information
Effective January 2013, the Affordable Care Act imposed an 2.3 percent excise tax on the manufacturing of certain medical devices. 

A 2011 AdvaMed study found the medical device tax places 43,000 jobs at risk with a corresponding loss of $3.5 billion in wages, which will have adverse impact on small and mid-sized companies as well as the communities where they are located. A majority of the medical device industry is made up of small to midsized businesses, with 80 percent of these companies having less than 50 employees and 98 percent with less than 500 employees. 

The medical device industry employs more than 400,000 workers nationwide; generates approximately $25 billion in payroll; and invests nearly $10 billion in research and development annually. The United States exports $5.4 billion more in medical technology than it imports annually and accounts for 40 percent of the global medical technology market. H.R. 436 currently has 238 bipartisan co-sponsors.

Schock’s Efforts to Repeal Medical Device Tax in the 112th Congress
Press Release: Ways and Means Committee, House, Vote to Repeal Medical Device Tax
Schock Remarks on the House Floor in Support of Repealing the Medical Device Tax
Joint Media Conference call with Canton Mayor and Congressman Bobby Schilling
Schock Letter to Food and Drug Administration Commissioner expressing concern about regulatory issues facing medical device industry


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