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Senate Democrats: Delay the medical device tax

WASHINGTON — Sens. Amy Klobuchar and Al Franken have signed a letter asking Senate Majority Leader Harry Reid to consider delaying the implementation of a forthcoming health care reform tax on medical device manufacturers.

The letter, originated last week by Klobuchar and North Carolina Democratic Sen. Kay Hagan, says device manufacturers "received little guidance about how to comply with the tax — causing significant uncertainty and confusion for businesses." They want Reid to support including the tax in a deficit reduction or tax reform package associated with the year-end "fiscal cliff."

The 2.3 percent tax on device manufactures' sales kicks in on January 1. Over the summer, the House passed an Erik Paulsen-sponsored bill to prevent the tax, paying for the lost revenue by limiting health insurance premium subsidies, and though Klobuchar and others said they would back a version of that bill, the Senate has yet to act on the matter.

The medical device industry has a large presence in Minnesota. All eight Minnesotans in the House voted for Paulsen's bill, even though most of its support nationally came from Republicans. The White House had issued a veto threat.

Notably, the letter — signed by 18 incumbent or incoming Senators, all of whom are, or caucus with, Democrats — asks Reid to consider delaying the tax rather than prevent it altogether. The device industry supports eliminating the tax, though even Paulsen recently said he's open to delaying its implementation if the Democratic-controlled Senate isn't willing to stop it right now.

"At this point, yeah, I would support a delay because I think we can delay it to give confidence to these great med tech companies, and then address it in more comprehensive tax reform in coming months," he said in a recent interview.

Devin Henry can be reached at dhenry@minnpost.com.

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Comments (2)

Kick the can!

If only the tax hadn't been passed in the first place. Delay doesn't really help as the companies still can't plan ahead.

Would someone like to clue me in?

I understood the tax to be one which is to be paid by the purchaser. If that's not the case, then won't manufacturers simply pass it on to the purchasers? Finally, given that the tax is a percentage of the sales price, it does not seem to me to tilt the playing field for manufacturers one way or the other.

What am I missing?