insights
Did Republicans forget the medical device tax?
When all the dust had settled following the passing of the Tax Cut and Jobs Act, the $1.5 trillion Republican tax overhaul, the medical device industry was left scratching its collective head and asking what happened to the medical device excise tax repeal?
As reported in the Washington Post, the 2.3 percent excise tax on medical device manufacturers went back into effect Jan. 1, 2018 following a two-year suspension of the tax that Congress passed in 2016.
Opposed by Republicans and some Democrats, the tax on medical device sales was initially part of the package of taxes levied to pay for the Affordable Care Act. It was widely seen as slated to be permanently repealed under the tax reform package, but in the end the provision to repeal the tax was dropped from the law that passed, thus the tax was reinstated when the New Year was rung in.
The Joint Committee on Taxation said that repealing the medical device tax would cut about $20 billion over a decade from the U.S. Treasury. Before it was put on hiatus, the IRS collected between $1 billion and $2 billion a year in 2013, 2014 and 2015.
So, what happens now?
The medical device industry is not giving up. According to a report in the LA Times the industry has secured commitments from congressional leaders that they will pursue a delay or repeal early in 2018. At the same time lobbyists are working with the Treasury Department to have penalties waived until Congress can take up a new bill to repeal the tax.
At the same time, the Advance Medical Technology Association (AdvaMed), the industry association has praised the Problem Solvers Caucus, which has introduced legislation (HR 4695) that includes a repeal of the medical device tax.
The Problem Solvers Caucus is a bi-partisan group of 40 representatives led by Democrats Josh Gotheimer (NJ) and Kurt Schrader (OR) and Republican Tom Reed (NY) who are trying to forge bi-partisan cooperation on key issues.
In a Dec. 21, 2017 press release AdvaMed issued a statement of support for the bill.
“We commend Reps. Tom Reed (R-N.Y.), Josh Gottheimer (D-N.J.) and Kurt Schrader (D-Ore.) – along with the rest of the Problem Solvers Caucus – for highlighting the need to repeal the medical device tax as part of their solution to the challenges facing the U.S. health care system.
“This is a tax on innovation, a tax on jobs, and a tax on the health and well-being of millions of American patients. It makes no sense from either a health care or a tax policy perspective, which is why bipartisan majorities for years in both the House and Senate have called for this tax to be repealed.
“We only have a few days before this tax goes back into effect, so we urge the Congress and the Administration to follow the Caucus’ lead and repeal this onerous tax once and for all.”
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