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White House threatens veto of Paulsen’s device tax bill

The White House says the bill will raise taxes on low-income individuals and the middle class to pay for a tax break for businesses.

WASHINGTON — The White House has threatened to veto Minnesota Republican Rep. Erik Paulsen’s bill to end an upcoming tax increase on the medical device industry.

Paulsen’s bill would stop a 2.3 percent excise tax on medical device sales set to take effect next year. The tax helps fund President Obama’s health care reform law, and Republicans would pay for the repeal bill’s $29 billion cost by limiting the federal subsidies individuals receive to purchase insurance from state exchanges.

The White House Office of Management and Budget says the bill’s funding mechanism “would fund tax breaks for industry by raising taxes on middle-class and low-income families.” It charges Republicans with choosing to “refight old political battles over health care … instead of working together to reduce health care costs.”

The White House’s opposition comes a day before the House is expected to debate and vote on the legislation. The bill has 240 co-sponsors, more than enough for passage, and Republicans are hopeful they’ll receive a fair amount of Democratic support for the bill.

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Paulsen said he was surprised by the veto threat, given the bipartisan support the bill has received. He cited lawmakers like Minnesota Democrat Tim Walz, who said Tuesday he would support the bill after he had examined its funding structure.

“I suppose the White House is worried it’s going to gain momentum and maybe it’ll gain traction in the Senate,” Paulsen said. “I just think, in the end, we’re going to be successful in moving this forward in the House and the Senate.”

The Senate, with its Democratic majority, is the biggest congressional hurdle for the bill going to the president. No Democrats have signed on to co-sponsor the Senate version of the bill, though some have voiced tentative support for a repeal.

Minnesota’s senators, Democrats Amy Klobuchar and Al Franken, have said they would like to repeal the tax, but neither have committed to voting for a bill with the Republican spending off-set attached.

Paulsen said the payment method, in which individuals who receive more federal money than they need to purchase health insurance are required to refund it to the government, should be noncontroversial given that Congress and the President have twice supported limiting the health insurance subsidy rate.

“They’ve already approved of this type of pay-for already, so it doesn’t make any sense to me,” Paulsen said.

This time around, however, Republicans want to “recapture” all subsidy overpayments rather than a set amount, leading some Democrats to call the plan a tax hike on low-income and middle class Americans.

House Republican leadership touted the legislation at a press conference Wednesday morning, saying it protects the medical device industry from one of 18 new taxes instituted under the Affordable Care Act. The medical device industry has warned that the tax could stifle innovation and lead to job cuts.

“We want this kind of innovation in America, we want these jobs,” Washington Rep. Cathy McMorris-Rodgers said. “This is a dynamic industry, the tax would be devastating for it and we’re going to be moving forward with repealing this medical device tax and keeping these jobs in America.”

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Devin Henry can be reached at