In Warsaw, Indiana, known as the “Orthopedic Capital of the World,” the CEOs of medical-device companies are none too pleased with the medical-device tax imposed by ObamaCare.

In this edition of Conference Room, Iconacy CEO Tom Allen and OrthoPediatrics CEO Mark Throdahl tell FBN’s Jeff Flock that the 2.3% excise tax will have a major impact on their businesses.

“This is a tax on sales. We have no profits to pay it from, so the only way to stump up the money to pay a tax of this size is by cutting programs,” says Throdahl, whose company makes orthopedic products for children with fractures or leg or spine deformities.

Throdahl says the tax will prevent his company from growing.

“All of the engineers who surround me – their payroll is equivalent to the tax we’re now paying Washington. So we could double the size of our technical staff were it not for the medical-device tax,” says Throdahl. While Allen’s company is still in the launch phase, so the tax hasn’t yet had a major effect, he says it has hindered his ability to add staff as well.

Given that Warsaw is known for its medical-device companies, the tax could also have a profound effect on both the community and the state of Indiana.

“There are estimates that over 40,000 jobs will be impacted in the medical technology industry by the medical-device tax,” says Throdahl.

Indiana Economic Development Corp. president Eric Doden says the tax is particularly disappointing to the community given the strides made to reduce the tax burden paid by these companies.

“In Indiana, we have had a history of entrepreneurship particularly in this arena. And these are high paying jobs and the thing that sort of disappointed us as a state is that Governor Pence and the State House [have] done an incredible job of lowering taxes and trying to create a better environment for these businesses to start to grow,” says Doden.  

Doden says these jobs have an average wage of $88,000, so it’s a shame that the tax will eliminate or reduce these positions.

“It’s a huge economic driver for Indiana,” says Doden.

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