Medical Device Tax | Device Tax Repeal | OH | KY | IN

Medical Device Tax Repeal Gains Support

Published on by Barnes Dennig in Health Care, Tax Services

Medical Device Tax Repeal Gains Support

By Kristen Howard, CPA

The medical device tax could be repealed by the end of March 2015. The medical device tax was designed as a way to pay for “Obamacare”. A new bill was introduced by Rep. Erik Paulsen (R-Minn.) that would eliminate the 2.3% tax and refund companies for taxes already paid under the law.

During a recent news conference, Paulsen said, “Many of us were saying from the outset this is a very ill-conceived idea. You’re going to have fewer startups, less ideas in the garage.”

The medical device tax is a 2.3% excise tax on the sale of certain medical devices by the manufacturer or importer of the device. The tax applies to the initial sales price of devices including bandages, mobile x-ray systems, non-absorbable silk sutures, nuclear magnetic resonance imaging systems, heart valves, and pacemakers, to name a few, sold to “medical providers” since 2013. Eyeglasses, contact lenses, hearing aids, and any other device that is sold as a retail product to the general public are exempt from the medical device tax.

Repealing the 2.3% medical device tax has support from state lawmakers in states with medical device manufacturing industries. However, the repeal could be hindered if lawmakers cannot find a way to offset the $30 billion in revenue the tax is expected to generate in just over a decade. The supporters of the tax say that the tax has only minor effects on the industry. Paulsen and Rep. Ron Kind (D-Wis.) are confident however, that both parties and chambers can find a way.

Historically, the Obama administration has threatened to veto device tax repeals, without an offset for the $30 billion in revenue the tax is expected to generate.


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