https://issuesinsights.com/2019/12/26/americas-critical-medical-device-industry-gets-a-needed-tax-cut/
Medical devices may not be as glamorous as blockbuster drugs, but they include some of the genuine miracles of modern medicine: pacemakers, artificial joints, replacement heart valves, scanners, and cancer radiation-therapy machines. The U.S. has been the global leader in medical devices, one of the few major industries that both boasts a net trade surplus and is a job creator. The sector employs 400,000 Americans directly and is indirectly responsible for almost 2 million more that supply and support the highly skilled workforce. Most important, its products are essential elements of modern medical care, including everything from CT scanners and pacemakers to blood pressure cuffs and robots used by surgeons.
But Washington politics has put this made-in-America success story at risk. For years, the medical device industry was ravaged by unwise public policy, including a devastating 2.3% excise tax that took effect at the beginning of 2013 as part of ObamaCare. It was included largely as an afterthought with little debate or consideration, as one of a grab bag of taxes, fees and fines used to finance the law’s litany of new spending programs.
After a decade, the omnibus spending bill just approved by Congress and signed by President Donald Trump has finally relegated the device excise tax to the dustbin of history.
The tax, which required the payment of billions of dollars by device manufacturers, was especially pernicious because it was assessed on gross sales, not profits. To put this in perspective, imagine that you’re a manufacturer of medical devices and had a profit of $100,000 on sales of $1 million after all your costs and expenses for everything from materials and labor to research. The excise tax would be $23,000, wiping out almost a quarter of your profits.
Think that example is extreme? Well, Signus Medical, a small Minnesota company that makes cutting-edge devices used in spinal surgery, ended up paying an effective tax rate of 79%.