Indiana officials say device tax will hamstring state industry

Indiana, home to devicemakers like Cook Medical and Zimmer, stands to lose big when the 2.3% medical device sales tax rolls around in January, state officials say.

During a visit to Fort Wayne's Greatbatch Medical facility, State Treasurer Richard Mourdock and Rep. Marlin Stutzman bemoaned the impending charge, part of the Affordable Care Act, saying it could cost 2,100 jobs in Indiana. Mourdock, a Republican running for a U.S. Senate seat, said the tax has already hampered Indiana's device industry, as Cook has scrapped plans to build 5 more facilities in the state in order to prepare for the hit.

Holding the presser at Greatbatch was something of an odd choice, though: The New York-based firm does not market devices of its own, instead manufacturing them for others, and thus would not have to pay the sales tax. Furthermore, the company is moving jobs to Indiana from its Swiss operations, a move Mourdock attributed to "the tax environment in Europe," but a Greatbatch spokesman told the Journal-Gazette that taxation was hardly the main motivator, citing instead the economic downturn overseas.

In any case, Indiana's devicemakers are bracing for the tax. In addition to Cook's scuttled expansion plans, Zimmer has said it will cut 450 jobs to prepare for the hit. Nationwide, Stryker ($SYK) has already started slimming down its ranks, and Welch Allyn is looking to trim costs before the charge kicks in. Industry heavies are in the same boat, with Medtronic ($MDT) announcing it has streamlined many of its operations to prepare for the tax.

- read the Journal-Gazette story

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