Job Loss Worries Loom If Medical Device Tax Returns
Job Loss Worries
The potential for thousands of lost jobs loom as the medical technology industry pushes once again for a permanent end to a medical device tax.
A new report from the Tax Foundation shows a return of the medical device tax would “would result in a decline of 21,390 full-time equivalent jobs and a reduction in GDP of $1.7 billion.”
The 2.3% tax on medical device sales that is part of the Affordable Care Act has already been on temporary hiatus since the beginning of 2016, but is scheduled to return at the end of this year if Congress doesn’t eliminate the tax or put it on hiatus once again.
Initial Impact of the 2.3% Tax
“The first time this tax was in effect, we saw massive job losses in the first two years,” said Scott Whitaker CEO of The Advanced Medical Technology Association (AdvaMed). AdvaMed represents hundreds of medical device makers, including Abbott Laboratories, Johnson & Johnson, Medtronic and Stryker as well as small firms and startups. “In an industry that’s 80% small businesses, cutting jobs quickly is unfortunately the only way to keep the doors open. That’s not smart health policy.”
Although it’s that time of year again, there’s no guarantee Congress will act to eliminate the tax despite a history of bipartisan support in both the U.S. House of Representatives and the U.S. Senate for permanently repealing the tax.
The Joint Committee on Taxation has said repealing the medical device tax would cost the U.S. Treasury about $20 billion over a decade. And the Tax Foundation report describes the device tax as unique in that it targets a “single industry.”
Meanwhile, time is running out before device makers will soon begin paying the tax again. “Since this tax must be paid starting in January, putting off repeal until the new year is not an option for the patients who depend on these companies for the medical technologies that improve and save their lives,” AdvaMed’s Whitaker said.
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