Medical devices tax should be repealed

KPC News

It’s rare to find an issue on which a significant number of Republicans and Democrats in Congress agree.

Repealing the medical device tax ranks as one of those issues.

The 2.3 percent tax on manufacturers and importers of medical devices began in 2013 as part of the Affordable Care Act.

Indiana’s Sen. Dan Coats, a Republican, is leading the charge to end the tax. Indiana’s Democratic senator, Joe Donnelly, has been opposing the tax since the moment he arrived in Washington in 2013.

Recently, Coats fired the latest salvo against the tax by issuing a new report about his objections. Coats points out that recently, 46 Democrats in the House of Representatives voted for a Republican-sponsored bill to repeal the tax. In a previous vote, 33 Democratic senators supported repeal.

Many of those Democrats represent states that, like Indiana, are major producers of medical devices. They are voting against a loss of manufacturing jobs they believe could go overseas.

Jobs making medical devices are no ordinary jobs.

“Medical device manufacturers directly employ 20,000 Hoosiers and indirectly support another 60,000 jobs, according to economists. These are high-paying jobs, too, and provide on average wages that are 56 percent higher than the average wage in Indiana,” said Stephen L. Ferguson, chairman of the board of Cook Group.

Coats and Donnelly both recognize that repealing the medical device tax is a good idea not only for Indiana, but for America.

Coats’ new report wraps all the arguments against the tax into a concise package. It makes three main points:

The first is that, as mentioned above, opposition to the tax is bipartisan.

Coats contends that the tax “violates commonly accepted principles of sound tax policy in that it targets a specific industry, lacks transparency and is rife with complexity.”

Coats says the tax discourages entrepreneurs and startups because it is based on total sales instead of profits. He says that means even an unprofitable company — often the case with new companies at first — must pay the tax.

The tax raises money to pay for some of the features of the Affordable Care Act. Supporters of the tax say the new health insurance system would collapse without income from the tax.

People favoring repeal believe the health care law could survive without the medical device tax.

“The tax, which was originally imposed to help pay for the ACA, is no longer necessary thanks to insurance cost reductions the ACA has helped to drive,” Rep. Rick Nolan, D-Minn., told an insurance industry website. “Repealing the medical device tax is one of the best ways we can help continue to advance the health of both our people and our economy.”

Coats said that the tax “stifles job creation, economic growth and research and development in the life-enhancing and life-saving medical technology industry.” He added, “Congress should be encouraging these manufacturers to continue their research and development of life-saving products, not punishing these employers.”

Coats and Donnelly both recognize that repealing the medical device tax is a good idea not only for Indiana, but for America.

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