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Reeder: Pet owners will help pay for Obamacare

Scott Reeder

Scott Reeder

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Updated: January 15, 2013 11:19AM



Is the Internal Revenue Service barking up the wrong tree?

When Obamacare was approved by Congress, few would have guessed that pet owners would be helping pick up part of the tab for the health care overhaul.

But earlier this month, the IRS decided that most of the equipment that veterinarians use should be subject to a new tax.

“It is absolutely ludicrous that there is not a specific exemption for medical equipment that will be used for non-human or veterinary purposes,” said Peter Weber, executive director of the Illinois State Veterinary Medical Association. “This is a tax to pay for a human health care plan.”

As part of Obamacare, medical device makers will begin paying a 2.3 percent tax on their gross sales as of Jan. 1. The tax is expected to raise $29 billion in revenue through 2022.

Even though Congress limited the tax to devices “intended for humans,” it appears veterinarians, and their clients, will feel its bite.

You see, while Congress makes laws, bureaucrats make the rules for enforcing those laws. And sometimes what Congress intends and what bureaucrats do are two different things.

For example, the IRS interpreted the health care reform bill’s reference to devices “intended for humans” to mean those that could be used for humans — not those only used for them.

Latex gloves, scalpels, syringes, catheters, suture material, stethoscopes, dental picks and just about any instrument a veterinarian uses also could have a human application. In fact, medical equipment for people and animals often rolls off the same assembly lines.

That left room for the IRS to nose its way in and decide that all medical equipment should be taxed the same — no matter whether it will be used for a person or an animal.

The ruling has some veterinarians squealing louder than a pig caught in a gate. I know a little bit about this because both my dad and my wife are veterinarians.

So medical equipment manufacturers will pass on the cost of the tax to vets. And the vets will pass on the cost to their clients.

Some are perplexed by the IRS’ refusal to make a distinction on how these dual-use devices are taxed.

But it shouldn’t surprise anyone. After all, government hangs on to money like a dog gripping a bone.

“There is virtually nothing I use that couldn’t have a human application,” Harold Watters, a Galesburg veterinarian, said. “Government likes to talk about raising ‘revenue,’ but that’s just another word for raising ‘taxes.’ It eventually all gets passed on to everyone. Lower- and middle-class pet owners will end up paying this tax, too.”

Scott Reeder is a veteran statehouse reporter and the journalist-in-residence at the Illinois Policy Institute, a nonprofit research group that supports the free market and limited government.



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