Medical Device Tax – Update & Talks of Change

When the Affordable Care Act became law in 2013, it changed the tax code in a number of ways, including the creation of a tax on medical device sales. At the time, the medical device tax was thought to be only a minor part of the bill – but the push to repeal it has sparked major discussion on Capitol Hill.

The bill implemented a 2.3 percent sales tax on “medical devices,” a category that covers items as complex as surgical robots and as simple as surgical gloves. It applies to the products manufactured and distributed by over 7,000 companies nationwide, located in nearly every U.S. state.

The broad-ranging impact of the tax has raised its profile among legislators in both houses of Congress. Conversation about repealing the medical device tax continues, with high-profile supporters from both major parties voicing their support.

In informal talks, both Republicans and Democrats have encouraged a repeal of the medical device tax. The House of Representatives has won bipartisan support for repeal of the tax three times in the past two years. During a series of nonbinding votes on a 2013 budget resolution, 34 Democrats joined Senate Republicans in voting for repeal.

Both parties say that the tax poses the risk of eliminating existing jobs or preventing new jobs from being created – a risk many members of Congress aren’t willing to take, especially as the memory of the recent recession continues to loom. They also note that the amount of money raised by the tax is small in comparison to the money raised from other sources in order to fund the ACA’s various programs, including the expansion of Medicaid in a number of U.S. states.

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