ObamaCare Taxes Medical Device Manufacturers
The ObamaCare Medical Device excise tax of 2.3% taxes manufacturers who profit under the law. The Medical device excise tax went into effect January 1st, 2013. This tax specifically has caught a lot of controversy as the new costs were dealt with in some cases by laying off workers and reducing full-time jobs to part time jobs and it is feared this will hurt innovation and smaller device companies. However it is important to note that Medicare and Medicaid pay out large amounts of tax payer dollars to this industry and they will as a whole see large profits under the Affordable Care Act.Medical device companies are one of the worlds largest industries, it is said to hurt smaller device companies since it is a tax on revenue and not profit.
Medical Device Tax Delay
Prior to the Medical device tax provision going into effect Amy Klobuchar (D-Minn.) and Kay R. Hagan (D-N.C.) authored the letter to express concern over the negative impact the tax could potentially have on the medical device industry and the U.S. economy as a whole. The letter was signed by 16 of their Democratic colleagues, including John Kerry (D-Mass.), Joe Lieberman (D-Conn.), Charles Schumer (D-N.Y.) and Al Franken (D-Minn.).
“The medical technology industry directly employs over 400,000 people in the United States and is responsible for a total of two million high-skilled manufacturing jobs,” the lawmakers wrote in their letter. “Additionally, this industry is also one of the few that enjoys a net trade surplus, significantly boosting U.S. exports around the globe.”
The IRS released its final regulations for the tax on Dec. 5, 2013 which did not give enough time for the medical device industry to comply, according to the letter.
At this time the above senators wrote, “With this year quickly drawing to a close, the medical device industry has received little guidance about how to comply with a tax – causing significant uncertainty and confusion for businesses. As we work together to develop a long-term solution to help move our economy forward, reduce our debt and reform our tax code, we urge you to support delaying enactment of this provision in a fiscally responsible manner,”.
Criticism of ObamaCare’s Medical Device Tax
Since Medical device manufacturers profit under the law (more patients with more insurance means more devices used) it only makes sense that this sector would help to fund the law. However, many say that the damage it does to the industry outweighs the gains. Lobbyists for the industry, which is one of the largest industries in the world, have made it their goal to see a repeal of this provision.
ObamaCare Medical Device Tax