House Supports Repeal of Medical Device Tax

The Association for the Advancement of Medical Instrumentation (AAMI) is reporting that the U.S. House of Representatives has passed a bill that includes a repeal of the 2.3 percent medical device tax, but the measure faces an uphill battle in the Senate, and previous roll-back efforts have fallen short.

HR 4, the “Jobs for America Act,” was promoted as a vehicle for “improving the conditions necessary for economic growth and job creation.” The bill was approved on Sept. 18, the same day that the House recessed until after the November elections. The bill enjoyed the support of 32 Democrats, 16 of whom are members of the New Democratic Coalition. Members of the coalition regard themselves as the pro-growth, tech-savvy wing of the party. In October 2013, they held a joint conference with a group of Republicans calling for the repeal of the tax, which was first levied last year.

Rep. Erik Paulsen, R-MN, a strong opponent of the excise tax, said the move would protect jobs. “The medical device tax continues to eliminate thousands of good-paying jobs and stifle medical innovation,” he said in a prepared statement. “The tax has already meant the loss of 33,000 jobs-equivalent to wiping out the entire Minnesota medical device industry-and will continue to harm our economy. Repealing this tax is the only answer for a bad idea that only gets worse.”

If the legislation ultimately becomes law, companies would receive a refund of the taxes paid on sales after Dec. 31, 2012.

Representatives of the medical device industry were quick to praise the vote.

“Federal policies that affect medical imaging innovation also have reverberating effects on patients, jobs and the U.S. economy,” says Gail Rodriguez, executive director of the Medical Imaging & Technology Alliance, in a joint statement with AdvaMed and the Medical Device Manufacturers Association. “We support the bipartisan efforts to repeal this harmful tax and pursue policies that promote the development of life-saving technologies.”

The bill’s passage came roughly a month after the release of a report by the Treasury Inspector General for Tax Administration that found the Internal Revenue Service needs to develop better methods for collecting the tax.

Previous repeal efforts have died in the Senate, where U.S. Senate Majority Leader Harry Reid, D-NV, has frequently expressed opposition to the repeal.

Source: AAMI