Late last week, the U.S. House voted yet again to repeal a 2.3 percent tax on medical devices, which was part of the 2010 Affordable Care Act. Effective lobbying by medical device manufacturers has repeatedly put this legislation on the GOP Congressional agenda, even though those manufacturers profited from other provisions in the health care reform law.
Representative Dave Loebsack (IA-02) was among the 46 House Democrats who joined all the Republicans present to pass the “Protect Medical Innovation Act” by 280 votes to 140 (roll call). Loebsack voted for a similar bill in 2012 but not for repealing the same tax in September 2013, when Republicans were trying to defund Obamacare as a condition for approving further federal government spending. In recent years, Loebsack has voted against most of the several dozen House bills to repeal all or part of health care reform, with a few notable exceptions.
Representatives Rod Blum (IA-01) and David Young (IA-03) supported the latest medical device tax repeal bill. Fellow Republican Steve King (IA-04) missed the June 18 vote, but we know where he stands. He has supported any and all efforts to scrap Obamacare, including rescinding this very tax in 2012 and 2013.
Next time the Iowans in the U.S. House claim to care about the deficit, remember that this bill would reduce federal revenues by nearly $25 billion over ten years without any spending cuts to offset the lost revenue.
The White House has warned that President Barack Obama would veto this bill, since it grants “a large tax break to profitable corporations” that are gaining new customers, thanks to health care reform. Bleeding Heartland user Jon Muller explained the economics here and exposed the “pure rent-seeking behavior” of an industry that “wants the fruits of ACA, but does not wish to put anything back on the table to make it happen.”
Another must-read on this issue is Matt Gardner’s post for the Tax Justice blog from earlier this year: “Big Medical Device Makers Decry Device Tax While Dodging Billions by Offshoring Profits.” I’ve enclosed excerpts below but encourage you to click through to read Gardner’s whole piece.
UPDATE: Added below David Young’s press release about this vote.
From an April 23 post for the Tax Justice blog by Matt Gardner, executive director of the Institute on Taxation and Economic Policy.
Republican lawmakers have indicated their interest in repealing the tax on medical devices since before it took effect in 2013, a position that is perhaps related to an ongoing lobbying spree by the medical device industry. Their efforts have generated some bipartisan support due to claims the tax hurts small business. But if their repeal efforts reflect a desire to protect medical device companies from the $2 to $3 billion a year the tax has been forecast to raise, then congressional tax writers should keep in mind that big, profitable medical device corporations have likely avoided more than 30 times that amount in federal income taxes by shifting their U.S. profits offshore. […]
The 15 biggest U.S.-based medical device companies, as measured by 2014 revenues, will likely pay some of the tax. These companies have another thing in common: they have all chosen to shelter some of their profits from U.S. tax by declaring them to be “permanently reinvested” in foreign countries (see table). […]
Two of these 15 device companies report their likely tax rate on repatriated profits, but the other 13 do not. […]
As long as these companies continue to avoid paying taxes on their offshore stash, it’s hard to see why Congress should prioritize repealing the medical device tax.
Press release from Representative David Young, June 18:
GETTING THE GOVERNMENT OUT OF THE WAY – REPEALING THE MEDICAL DEVICE TAX
Washington, DC — On Thursday, June 18, Congressman Young released the following statement after the Housed passed H.R. 160, the Protect Medical Innovation Act of 2015, which repeals the medical device tax.
“The Medical Device Tax is an unnecessary burden and another example of the president’s health care law having a direct disconnect with what works for hardworking Iowans and Americans. I was proud to join the House of Representatives in passing the repeal of the harmful Medical Device Tax today, and it was an overwhelmingly bipartisan vote. This is an ill-conceived tax on nearly every medical product made in our country, driving up prices for Americans and putting our manufacturers and workers at a disadvantage against foreign competitors. Passing this bill is a commonsense step to control health care costs and grow our economy.”