Medical Devices

Lobby group ups ante on device tax repeal by taking 50 execs to talk with lawmakers

Morgan Stanley analyst David Lewis may be cutting the chance of a device tax repeal to 20 percent from 30 percent given the re-election of President Obama, but device lobby group AdvaMed is not willing to concede the fight yet.

Around six weeks are left before the 2.3 percent excise tax is set to go into effect on Jan. 1, 2013, and the Washington, D.C.-based industry group is hoping to persuade newly elected members of Congress that they need to repeal it in the lame duck session.

On Thursday, the group will shepherd 50 senior device industry executives to Capitol Hill to explain to lawmakers how the tax will have a “devastating effect on jobs,” said David Nexon, senior executive vice president of AdvaMed in a conference call with reporters Wednesday.


They include executives from C.R. Bard, Stryker, Cook Medical, but it appears that big name firms like Medtronic decided not to participate.

On Wednesday, AdvaMed also published a new report that shows that the device industry’s tax hill will jump dramatically because of the device tax. The report, compiled by Ernst & Young found that the $2.5 billion that the Joint Committee on Taxation estimates will be what the device industry owes the federal government next year is 29 percent of the industry’s overall 2013 federal tax liability. The overall federal income tax liability of the industry is estimated to be $8.7 billion in 2013, according to the report.

“What this study shows that this excise tax will raise our industry’s federal tax liability by an amount equal to a whopping 29 percent of our current income tax payments, Nexon said. “America already has the highest corporate tax rates in the world. To load this additional burden on an industry that is so important to our economy and which is so important to our economy and which is facing strong international competitive pressures makes no sense at all.”

So who can help to repeal this tax? For that, AdvaMed is looking toward several lawmakers included newly Senate Democrat Joe Donnelly of Indiana, who voted for the repeal when he was in the House of Representatives.

Only time will tell whether AdvaMed will be successful, but given that the Internal Revenue Service has not issued a final regulation on how the tax will be implemented, and the confusion in some quarters, perhaps a delay of the tax may be in order.

[Photo Credit: Joe Hage, owner of]

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