> To clarify: it is an excise tax and applies to the _gross sale price_, not the profits (so even if the division runs at a loss, they still have to pay). http://www.irs.gov/uac/Medical-Device-Excise-Tax:-Frequently.... I'd agree with your skepticism if it were affecting net (after employee salaries etc)
AKA a sales tax. Which don't generally lead to broad-scale layoffs when they're imposed. Did California have massive layoffs when they raised their tax on everything in the entire economy in January? How about when Canada introduced a brand new 7% across the board sales tax in 1991?
As a business, the standard way of responding to that kind of tax is to raise your prices correspondingly (to an appropriate level set by your supply/demand curves of course).
AKA a sales tax. Which don't generally lead to broad-scale layoffs when they're imposed. Did California have massive layoffs when they raised their tax on everything in the entire economy in January? How about when Canada introduced a brand new 7% across the board sales tax in 1991?
As a business, the standard way of responding to that kind of tax is to raise your prices correspondingly (to an appropriate level set by your supply/demand curves of course).