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Senators ask for device tax delay

by Loren Bonner, DOTmed News Online Editor | December 10, 2012
Sen. Amy Klobuchar
A group of Senators are urging Majority Leader Harry Reid to delay the 2.3 percent medical device tax that is scheduled to take effect on Jan. 1, 2013.

On Monday, Sens. Amy Klobuchar (D-Minn.) and Kay Hagan (D-N.C.) along with 16 other senators and senators-elect sent a letter to Reid asking for his support to stall the tax and instead work together to develop a long-term solution.

"With this year quickly drawing to a close, the medical device industry has received little guidance about how to comply with the tax — causing significant uncertainty and confusion for businesses," stated the letter.

The medical device industry and many members of Congress have been fiercely opposed to 2.3 percent tax, which will help finance the Affordable Care Act by raising roughly $30 billion over 10 years. They believe it will force companies to lay off workers and dry up R&D funding.

The letter states that the medical technology industry directly employs over 400 thousand people in the U.S. and is responsible for over two million high-skilled manufacturing jobs. In addition, said the letter, the industry is one of the few with a net trade surplus, which significantly boosts U.S. exports around the globe.

Last month, the industry trade lobby AdvaMed released a study that confirmed layoffs and limited R&D funding by manufacturers because of the tax. The report, prepared by Ernst & Young LLP, found that the new tax will raise manufacturers federal tax liability by an amount equal to 29 percent of their current federal income tax payments.

Reacting to this latest development from Congressional leaders, AdvaMed's senior executive vice president of government affairs said in a statement:

"We appreciate Sen. Klobuchar and Sen. Hagan's leadership on this issue and also appreciate the broad bipartisan support for preventing the implementation of the device tax which is slated to go into effect Jan. 1. Delay of the tax is an important step, but Congress must fully address the device tax as it works to develop a long-term solution to help our economy more forward, reduce our debt and reform our tax code."

According to OpenSecrets.org, Medtronic Inc. was a top contributor to Klobuchar's 2012 reelection campaign.

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