Medical device tax: A tax ‘just because’

Calling it a levy with no purpose or rationale, Sen. Scott Brown (R-Mass.) is seeking to revoke an excise tax set to be charged to medical device makers in 2013 as part of the healthcare reform law.

“A 2.3 percent tax just because?” Brown told MassDevice Friday after a speech at the Mass. Institute of Technology. “For some of these companies, that’s their entire net profit. That’s jobs, it’s R&D, it’s a whole list of other things. It’s not a necessary tax.”

The Patient Protection and Affordable Care Act President Barack Obama signed into law last year contains a provision that would require device makers to fork over 2.3 percent of their gross U.S. revenues beginning in 2013. The levy is designed to help pay for healthcare reform and aims to raise about $20 billion over 10 years.

Brown, who campaigned against the tax as he sought the late Sen. Edward Kennedy’s seat in 2009, told us opposition to the tax is “gaining a lot of steam” inside the Beltway.


“It’s hard to say right now, but as with other bills I’ve had a tremendous amount of interest from everybody,” Brown said when asked to handicap his bill’s chances of passing.

Should the bid fail, he added, “I’m open to all suggestions, because the bottom line is it’s being used just because. We can do better than that.”

It’s not Brown’s first bid to overturn the tax. An amendment he introduced last year during the contentious debate over healthcare reform failed to pass muster, but Brown vowed not to give up the fight.

Thursday, Boston Scientific Corp. (NYSE:BSX) CEO Ray Elliott praised Brown for his stand against the device tax.

“Repealing this onerous tax would help the US maintain global leadership in the development, manufacturing and export of medical technology,” Elliott said.

Other moves to repeal the tax are also afoot in Washington. Republicans in the House and Senate, including Sen. Orrin Hatch of Utah, introduced a trio of bills to shoot it down in late January. Brown was a co-signer of the Hatch bill.

His solo bill aims to repeal the tax without adding to the huge federal deficit by rescinding $39 billion in appropriated discretionary funds. Brown’s measure would give the director of the federal Office of Management and Budget final say over which discretionary funds to tap, excluding cash earmarked for the U.S. Dept. of Defense or the Dept. of Veterans Affairs.

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