Tax on medical devices resuming after 2-year suspension
BOSTON - While much of corporate America will enjoy a tax cut in the new year, one industry is getting a tax increase it has fought hard but so far unsuccessfully to avoid.
A 2.3 percent excise tax on medical device manufacturers went back into effect Monday after a two-year hiatus. It was first imposed in 2013 as one of several taxes and fees in the Affordable Care Act that pay for expanded health insurance under the law.
The tax was strongly opposed by the $150 billion a year industry that produces everything from catheters to heart stents to artificial joints. In Congress, it was unpopular not only with Republicans but many Democrats from states like Massachusetts and Minnesota with large numbers of medical device companies.
Congress voted to suspend the tax for 2016 and 2017 with the widespread expectation it would be permanently abolished before 2018. But various GOP efforts to repeal the Affordable Care Act and the taxes associated with it failed, and the sweeping federal tax overhaul recently signed by President Donald Trump didn’t eliminate the medical device tax either.
Supporters of the tax contend manufacturers have overstated both the harm suffered while the tax was in effect, and the potential impact of its resumption.
Device makers certainly aren’t giving up their fight. They still hold out hope of repealing or again suspending the tax.