Ok, so we know that a lot of companies were loudly complaining about the effects of the medical device excise tax on their profits. Although some dismissed these complaints as unfounded, it seems to be a fact that a lot of layoffs happened in 2012.
Although there was a lot of concern surrounding the implementation of the tax, these massive layoffs all came before
the tax was actually implemented. So is the tax really to blame here? Zimmer
says it was, at least partially, citing its estimated $60 million tax bill for 2013. Covidien
and St. Jude
were among the companies that said the tax was not to blame for layoffs. Medtronic and St. Jude are also facing tricky business environments in the CRM device space, which could be contributing to their layoffs.
The tax might be taking a lot of heat for causing layoffs in the industry, but it's difficult to imagine that all of these layoffs, happening the year before the tax came into effect, are due to the tax. Sure, maybe companies are thinking ahead, but you?d think they might at least wait to see if all the efforts to get the tax repealed were successful and if the impact was as bad as they thought before sending a whole bunch of employees packing. As a result, some articles
are saying that the excise tax is being blamed for external factors that are causing layoffs, and it just happens to be an easy target.
More jobs have already been cut in 2013 (with one interesting case being Smith & Nephew initially blaming the tax
, then taking it back
), so this continues to be a hot topic. Is the tax to blame, or is it a scapegoat? Let us know your thoughts in the comments.