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Analysts not terribly optimistic on med device tax repeal

by Brendon Nafziger, DOTmed News Associate Editor | November 16, 2012
Medical device industry executives and lobbyists flocked to Washington this week to persuade lawmakers to repeal a 2.3 percent excise tax that takes effect in less than two months, but some analysts say Congress might be too distracted by fiscal cliff worries to take any action.

The tax, called for by the Affordable Care Act, goes into effect in January, and lobbies representing manufacturers have stepped up their campaign to quash it. On Wednesday, trade lobby AdvaMed released a study prepared by Ernst & Young LLP that argued the tax would raise companies' federal tax liability by an amount equal to 29 percent of their current federal income tax payments. The results, according to the manufacturers, will be job losses and a drying up of R&D funding.

Conservative magazine National Review, citing the Ventura County Star newspaper, said the coming tax and other economics troubles have already driven more than 10 companies to announce nearly 5,000 planned layoffs.

"America has the highest corporate tax rates in the world," David Nexon, senior executive vice president with AdvaMed, told reporters on a call Wednesday. [This tax] flies in the face of everything tax reform is supposed to achieve."

AdvaMed said, along with fellow trade groups MDMA and the Medical Imaging Trade Alliance, it staged a "fly-in" on Capitol Hill this week where CEOs from B. Braun, Cyberonics, Toshiba, Hologic and Cook Medical, among other companies, would meet with politicians.

But National Journal said despite the three trade groups spending some $1.5 million in lobbying this year, lawmakers might be more worried about the coming fiscal cliff than resolving the device tax. "The issues that have to be done, just have to be done," said Rep. Sander Levin, a Michigan Democrat and the party's ranking member on the House Ways and Means Committee, according to the paper. Med City News also reports that a Morgan Stanley analyst cut the chance of a repeal from 30 percent to 20 percent after Obama's re-election.

Still, the lobbies are pushing ahead.

"We're trying not to think of too many hypotheticals where we're not successful this year," J.C. Scott, senior executive vice president of government affairs with AdvaMed, said on a press call this week.


Todd Schmechel


November 21, 2012 10:07

I love the people who believed "O" when he said he would not raise taxes on the middle class. Where do they think this 2.3% will end up coming from?

The level of ignorance is amount to sticking ones head in the sand. Ridiculous!

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