Jobs Bill Takes Another Swipe at Medical Device Tax Repeal

A bill proposed in the U.S. House of Representatives is taking yet another swing at repealing the 2.3 percent medical device excise tax associated with the Affordable Care Act.

On Sept. 15, House Ways and Means Committee Chairman Dave Camp (R-Mich.) introduced the “Jobs for America Act” (H.R. 4), an omnibus bill (which means in includes an amalgam of unrelated goals) that includes several tax provisions already passed by the House, such as a permanent tax credit for research and development, permanent bonus depreciation, and other provisions that expired at the end of 2013.

On Friday, Sept. 19, the House—before leaving on recess until after the midterm elections in November—voted to approve the bill with a vote of 226 to 191.

“MDMA thanks the House of Representatives for working to strengthen medical technology innovation by removing a major roadblock towards developing the cures of tomorrow,” said Mark Leahey, president and CEO of the Washington, D.C.-based Medical Device Manufacturers Association (MDMA), following the vote. “Repealing the medical device tax not only empowers patients and providers, but will allow America’s innovators to create more high-tech manufacturing jobs that our communities desperately need.”

The Advanced Medical Technology Association (AdvaMed) also was quick to laud the effort.

“AdvaMed commends the House for taking action on legislation that includes a repeal of the jobs-crushing medical device tax,” said Stephen J. Ubl, president and CEO of Washington, D.C.-based AdvaMed, prior to the vote. “AdvaMed also appreciates the House’s efforts to address other specific components of the tax code that are important to innovative and emerging growth medical technology companies.”

According to a survey of AdvaMed members, 14,000 industry jobs have been lost, along with the forgone hiring of 19,000, resulting in a total negative direct industry employment impact of approximately 33,000 jobs to date, Ubl said. He also cited a recent report released by the U.S. Department of the Treasury’s inspector general that detailed a number of problems that the Internal Revenue Service has had in administering the tax, which “underscores that this policy is inappropriate for a dynamic and innovative sector like the medical device industry,” he added.

“AdvaMed, in particular our Emerging Growth Company Council, welcomes the inclusion of several important tax policy changes in the jobs bill,” Ubl said. “These include:making the R&D tax credit permanent; increasing the amount small businesses may immediately deduct under section 179 for investments in property, equipment and computer software; and permanently increasing to 50 percent the amount of depreciating value in a business asset that a firm may deduct in the first year—known as ‘bonus depreciation,’”

Ubl said the provisions would provide “needed certainty” for tax planning purposes, but would allow “companies— including entrepreneurial developers of advanced medical technologies to invest more heavily in their businesses while encouraging job creation and economic growth across the country.”

Multiple attempts to repeal the tax have passed the Republican controlled house, but have not been as successful in the Democratic-controlled Senate—despite bipartisan support of device tax repeal. It remains unclear, however, if a lame-duck Senate will move forward on this matter once it returns from recess.