By DBJ Staff/Dec 21, 2017
Medical device maker NuVasive Inc. says savings from President Donald Trump‘s new tax reform will help it to fuel innovation and growth in its business, which could be a boon to local operations that are already experiencing growth.
San Diego-based NuVasive (NASDAQ: NUVA) announced today the potential implications to its business based on the recent passage by Republicans in the U.S. Congress and soon-to-occur signing by President Trump of the tax bill. The new bill will reduce the U.S. corporate tax rate from 35 percent to approximately 21 percent. This is the largest tax overhaul in 30 years and will significantly reduce the future corporate tax rate for NuVasive, which prior to the enactment of the tax overhaul was expected to be approximately 33 percent on a non-GAAP basis in 2018, the company said. 
While the Company will be undertaking a thorough analysis over the coming weeks, early analysis indicates that the NuVasive non-GAAP tax rate will drop into the low 20 percent range in 2018 and in future periods converge to a 20 percent non-GAAP tax rate.
“The savings from this landmark decision are expected to boost forward-looking free cash flow and non-GAAP EPS well in excess of 10 percent per year beginning in 2018, delivering incredible incremental value-generating opportunities for our shareholders,” said Gregory T. Lucier, chairman and chief executive officer of NuVasive. “Innovation requires fuel, and this surplus can support increased investments in R&D to provide solutions that empower spine surgeons to change the lives of their patients. This is a tremendous opportunity for the medical device industry, and a major spark in our ability to continue to invest in life-changing innovations.”
Corporations will have more money to spend, invest and hire. Taxpayers will have more money in their pockets to spend or save. Overseas profits can be repatriated for investment. Tell me again why not a single Democrat voted for the bill. More importantly, why are Americans supposedly against the bill. This bill will benefit everyone in the U.S. Even those that don’t deserve it.
Some reasons could be:
(1) Companies are already sitting on enormous piles of cash that they aren’t using to invest and hire. Why would we expect them to use the tax savings any differently?
(2) The US will be charging hundreds of millions more on the credit card to provide this tax break.
(3) Unemployment is already very low. Where are these companies going to find all these people to hire?
The device tax doesn’t hurt the large companies anywhere near as much, but can be devastating to start ups that are developing new technologies and are not yet profitable. The tax is on top line revenue and in these cases, cuts deep into the operating budget and can be extremely destructive. It is certainly an “Anti-business” regulation.