U.S. Senate signals willingness to repeal medical device tax

  • Article by: JIM SPENCER , Star Tribune
  • Updated: March 21, 2013 - 9:26 PM

The sense-of-the-Senate vote is part of a repeal effort backed by senators from Minnesota, which has a strong medical technology industry that includes 400 companies and more than 30,000 jobs.

 

– The Senate voted for the first time Thursday to make it a priority to repeal a newly implemented tax on medical devices. The 79-20 vote was only a sense-of-the-Senate measure; it contained no details and set no policy except to say that repealing the tax could not add to the federal deficit.

A separate bill will be required to actually put the repeal in motion. That bill must find a way to replace the $20 billion to $30 billion the tax is expected to raise over the next decade.

Nevertheless, supporters of the repeal, including Minnesota Sens. Amy Klobuchar and Al Franken, said they believe Thursday night’s vote was a major symbolic victory.

The overwhelming bipartisan approval of the measure signals that the Senate wants to find a way to repeal the tax, Klobuchar said.

Her colleagues are serious about finding a way to pay for the repeal, Klobuchar said.

Both Klobuchar and Franken expressed concern that the tax would stifle growth and cost good-paying jobs in Minnesota’s medical technology industry, which includes 400 companies and more than 30,000 employees.

Klobuchar, who offered Thursday’s budget amendment, said the vote indicates support for a law she introduced with Utah Republican Sen. Orrin Hatch that would repeal the tax. However, that law contains no formula for offsetting the revenue lost if the device tax goes away. Support for it will depend on how it is paid for, Klobuchar said.

The tax took effect in January and brought in nearly $100 million in its first two weeks. If that trend continues, the tax would generate roughly $2.5 billion per year in federal revenue.

Finding an alternative $20 billion to $30 billion revenue stream over the next decade has been a continuing challenge for device tax opponents. Many hope to fill the revenue gap by including a device tax repeal in a comprehensive tax reform package.

An attempt to repeal the tax puts the Democratic-controlled Senate at odds with the White House. President Obama has said publicly that he does not want the tax repealed because it helps pay for national health care reform, the signature legislation of his first term.

Klobuchar and Franken both voted for health care reform, including the device tax, after they succeeded in getting it cut in half. Now, they hope to get the rest of it.

Health care reform is not going to expand the market for medical devices as originally thought, Franken told his Senate colleagues.

“This is about innovation and jobs,” Klobuchar said shortly before the vote.

After the vote, she added, “This is something in the health bill that needed to be changed.”

 

Jim Spencer • 202-383-6123

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