House passage of cadillac tax repeal opens door to medical device tax repeal
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House passage of cadillac tax repeal opens door to medical device tax repeal

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WASHINGTON, D.C. – The Advanced Medical Technology Association (AdvaMed) today, in light of passage by the U.S. House of Representatives of legislation to repeal the Affordable Care Act’s so-called “Cadillac tax,” called on Congress to repeal the medical device excise tax.

“Today’s House vote sent a clear message that taxes on our health care system are a bad idea – and that the case for keeping the medical device tax in place no longer holds water,” said Scott Whitaker, president and CEO of AdvaMed. “Passage of the Cadillac tax repeal opens the door to passage of the device tax repeal, which would be a win for innovation, for patients, and for job creation.

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“A strong bipartisan majority of members in both chambers supports full repeal of the medical device tax – and really, after today’s vote on the Cadillac tax, it’s not possible from either a tax or health policy perspective to justify this onerous tax,” Whitaker added. “We hope Congress will repeal the device tax without delay.”

Unless Congress acts quickly, the U.S. medical device industry will face a $20 billion tax increase when the excise tax goes back into effect Jan. 1, 2020. The tax, which was in effect from 2013-2015, proved to be a significant burden on innovative medtech companies, as it is a tax on sales – not profit – which is particularly devastating for smaller start-ups, most of which are not yet profitable.

While the tax was in effect, the U.S. medtech industry lost approximately 29,000 jobs, and research shows that an additional 25,000 jobs could be lost by 2021 if the tax is not permanently repealed. In addition, R&D investment in new treatments and cures will decline by approximately $2 billion if the tax is reinstated.

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