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  • Brian Cole

Medical Device Tax is History after Trump signs repeal

Updated: Jul 22, 2020

The medical device industry hailed President Trump’s signing into law a bipartisan federal spending package that brings in an end to a tax the medical technology industry has been fighting against for the last decade.

The 2.3% tax on medical device sales that is part of the Affordable Care Act has already been on temporary hiatus since the beginning of 2016, but was scheduled to return at the end of this year if Congress didn’t eliminate the tax or put it on hiatus once again.

Medical device makers feared a major hit to their bottom lines, research budgets and jobs if Congress didn’t end or at least shelve the tax before the end of the year. A report released earlier this month from the Tax Foundation shows a return of the medical device tax would “would result in a decline of 21,390 full-time equivalent jobs and a reduction in GDP of $1.7 billion.”

This time, however, the medical device industry and its supporters finally got their dream legislation package that repealed the tax. The Democratic-controlled U.S. House of Representatives repealed the legislation followed by similar action by the U.S. Senate earlier this week. Trump signed the legislation Friday night.

“This is a great day for American patients, American jobs, and American innovation: The medical device tax is officially history,” Scott Whitaker CEO of The Advanced Medical Technology Association (AdvaMed) said of the device tax’s repeal as part of the fiscal 2020 appropriations legislation. AdvaMed represents hundreds of medical device makers, including Abbott Laboratories, Johnson & Johnson, Medtronic and Stryker as well as small firms and startups. 

Before it was put on hiatus, the IRS collected between $1 billion and $2 billion a year in 2013, 2014 and 2015. But Congress continued to provide the industry with a temporary fix usually as budgets or spending packages were being negotiated at the end of the year or near the end of a Congressional session.

“With the end of this burdensome tax, the U.S. medtech industry can do what it does better than anyone else in the world: develop life-changing innovations that save and improve patients’ lives, and create high-paying, high-tech jobs to keep the American economy booming,” Whitaker said.

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