Cost of repeal is offset by ending tax breaks and free-drilling loopholes for oil and gas companies
Washington (January 11, 2018) – Senator Edward J. Markey (D-Mass.) reintroduced legislation, along with Senator Elizabeth Warren (D-Mass.), to eliminate the 2.3 percent excise tax on medical devices. The medical device tax, which first took effect in January 2013 as part of the Affordable Care Act, applies to everything from surgical tools to pacemakers. Congress suspended the medical device tax for 2016 and 2017, but the tax was reinstated on January 1, 2018. The “No Taxation on Device Innovation Act” offsets the cost of repealing the medical device tax by ending an estimated $29 billion in tax breaks for oil companies, free-drilling loopholes, and taxpayer subsidies for the oil and gas industry over the next decade. The legislation is endorsed by the Massachusetts Biotechnology Council and the Massachusetts Medical Device Industry Council.
“Massachusetts is the national leader in biomedical research, and our innovation economy supports the creation of new and improved technologies that spur economic growth and save lives,” said Senator Markey. “It’s beyond time to end 19th century tax breaks for highly-profitable oil and gas companies that need no assistance and invest in 21st century innovation and companies that create jobs and save lives. The No Taxation on Device Innovation Act would ensure that working families aren’t burdened with increased costs associated with this tax , while continuing to invest in a medical device industry that is key to the Commonwealth’s culture of innovation.”
“Massachusetts medical device companies are the most innovative in the world, and their life-changing devices help people live longer, healthier futures,” said Senator Warren. “I’m glad to work with Senator Markey to repeal the medical device tax with an appropriate offset so Massachusetts device companies can continue to innovate and save lives.”
“The growing convergence of medical device and biopharma companies is changing the lives of sick people around the world through the development of new combination products, and powerful diagnostics that allow for personalized medicines,” said Robert K. Coughlin, President and CEO of the Massachusetts Biotechnology Council. “Repeal of the medical device will allow this innovation to thrive and keep Massachusetts as the best life sciences cluster in the world.”
There are more than 6,500 medical device companies in the United States supporting more than two million jobs across the country – including 82,000 jobs in Massachusetts alone. The medical device industry adds $17.6 billion to the Commonwealth’s economy. Since going into effect, the medical device tax has been cited as hampering the industry’s ability to invest in research and development and has decreased certainty for medical technology workforce expansion. The medical device tax can be particularly burdensome on new innovators and small businesses, because it is levied on medical device sales regardless of whether the company is making a profit.