President Obama Will Not Delay Med Device Tax
December 17, 2012 ~ A new medical device tax is set to go into effect January 1, 2013 and President Obama says it will not be delayed. Part of the Affordable Care Act, medical device manufacturers have strenuously objected to the 2.3% tax to be imposed on every medical device sale unless the manufacturer has a small tax liability. Companies will make semimonthly tax deposits to the IRS although the IRS plans to make some concessions on late fees as the tax phased in, reports Mass Device here.
In a Friday interview with WCCO-TV in Minneapolis, a medical device hub, the president said, “The healthcare bill is going to provide those healthcare companies 0 million new customers. It’s going to be great for business and they’re doing really well right now and they’re going to get 30 million more customers as a consequence, so this additional tax essentially comes back to them as new customers.”
Last week 18 Democrats in the senate sent a letter to Senate Majority Leader Harry Reid asking for a delay of the tax claiming it would hurt the industry which employs over 400,000 people in the U.S. The med device companies have long complained the additional tax will make it difficult to compete globally and could hinder innovation. The letter said the medical device industry has received very little guidance on the tax creating uncertainty in the industry.
The companies would like the tax repealed claiming it will lead to job losses. The Wall Street Journal has the letter here dated Dec 4. Signatories included Sens. John Kerry, Barbara Mikulski, Al Franken Herb Kohl, Charles Schumer, Elizabeth Warren among others. The senators are from state where the medical device industry has a large presence.
The tax should raise about $20 billion over the next ten years. The industry has fought the tax since its inception however the U.S. Department of Treasury recently issued regulations on whom and how the tax will be imposed, so it appears that it will be implemented. Here is the document.