Economists Spar Over the Medtech Tax

Economists Spar Over the Medtech Tax

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A pair of economists face off over the medtech tax, with one calling the levy a new incentive for a complacent industry and the other warning that the tax makes for a hostile environment for medtech innovation.

A pair of economists have taken to the internet to pen contrary opinions on the medical device tax, with 1 arguing that the tax may be good for an industry that needs a jolt and the other warning that it could drive innovation away from the U.S.

Kelly School of Business professor emeritus Larry Davidson this week published on his blog an in-depth post decrying the tax and tearing apart arguments made by a fellow follower of the so-called “dismal science” of economics.

Davidson wrote concerns about the medical device tax are “well-founded” and that Center for Governmental Research chief economist Kent Gardner was “wrong on a lot of counts” in his op-ed defending the levy.

“This tax is not good for U.S. employment nor U.S.-based innovation and competitiveness,” Davidson wrote. “The U.S. should be happy to have the world’s leading medical device companies and it should be fighting to keep it that way.”

Gardner had written in a November op-ed for the Rochester Business Journal that the 2.3% medical device sales tax created by the Affordable Care Act would do little harm to the industry, its workforce or its profits.

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