Calls for Abolition of Medical Devices Tax Grow Louder

Published By : 01 Apr 2015 | Published By : QYRESEARCH

A part of the 2010 healthcare law passed by U.S. President Barrack Obama has found bipartisan opposition due to its inclusion of a 2.3% excise tax on the sales of medical devices. Democratic Representative Edward Markey filed a bill last month that would remove the mandating of this widely unpopular tax. Opposition from Democratic senators demonstrates that this is not just a Republican issue seeking to oppose Obama’s every move and is a genuinely important topic.

The tax is expected to bring in an additional US$29 billion in the next 10 years, but in spite of its massive revenue generation capacity, the chairman of the Senate’s Committee of Finance, Utah Republican Orrin Hatch, is against the tax. Dissenters like Markey and Hatch have strong support from Senate Majority Leader Mitch McConnell and Senator Elizabeth Warren, the latter of whom oppose it for the disproportionate effect it has on small businesses. Seth Moulton, the new Democratic congressman for the 6th District, actually preceded Markey in campaigning against the tax, raising his voice against it a year ago. Moulton described the tax as a “job-killing tax”.

Innovation and research, which is crucial for the development of the medical devices industry, is hampered by the tax. Massachusetts, which Markey represents, has among the largest workforces in the medical industry in the country, trailing only California. This tax sounds an alarm bell for small businesses in the industry in Massachusetts, which not only lead product innovation but also have to newly hire specialized compliance personnel, in contrast to big companies, who already have extensive divisions of legal experts devoted to compliance issues.

This point was stressed upon by Moulton in his winning campaign last year, explaining that the tax actually has more effect on the medical devices industry than the 2.3% face value suggests.
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