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Erik Paulsen tries again to dump medical device tax

WASHINGTON — Minnesota’s whole House delegation has backed efforts to repeal the tax, but this will be a hard battle to win.

Rep. Erik Paulsen
MinnPost photo by Devin HenryRep. Erik Paulsen
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Paulsen held up the one major ACA change Congress has managed to enact. In 2011, lawmakers overturned the law’s 1099 tax reporting requirement mandating business owners file documentation when they buy more than $600 worth of goods or services from a vendor. The rule was seen as burdensome and would have hit cash-strapped small businesses.

There are a couple key differences between that and the device tax, however:

  • First, repealing the 1099 requirement had broad bipartisan support. The Senate passed it with 87 votes, and even Obama called it an “unnecessary burden for small businesses.” That’s not the case with the device tax: It’s a mechanism built into the law to raise revenue to help implement it, and there’s been little indication most Democrats or the president consider it the kind of mistake the 1099 provision was.
  • Secondly, the tax has taken effect, and the government has started receiving revenue from it. It’s a “tough hill to climb because, number one, it’s started. Revenue is coming in. It’s always tougher to stop a tax once its started,” Paulsen said.

Two-pronged lobbying effort

Mandel said the device industry’s lobbying effort will be geared around a two-part message, the first being the lost revenue and job cuts companies have pinned to the tax.

Take, for example, St. Jude and Medtronic. The former told the Star Tribune last month that it plans to pay up to $60 million under the tax plan. When it laid off 800 employees last year, the tax was partly to blame. Medtronic plans to spend between $125 million and $175 million annually.

But the message is broader than that.

“It’s really about the future of the medical device industry and where it’s going to be,” Mandel said. “We see a future where the device industry is largely located in other places and where leadership no longer is in the US. We’re trying to keep that from happening.”

Paulsen’s office said he’ll have 157 co-sponsors on the bill when it drops on Wednesday. Majority Leader Eric Cantor voiced his support for the measure in a Tuesday speech, and Paulsen said the bill could move forward either on its own, or tied into a larger tax reform bill.

Its passage in the House is certain if GOP leaders want it to advance. Pushing it through the Senate and White House is where the real heavy lifting lies.