Medical device tax opponents’ $29 billion question

REUTERS/Jonathan Ernst
With the GOP takeover of Congress, action on a device tax repeal is coming sooner rather than later.
Rep. Erik Paulsen

• First, Paulsen’s bill could pass on its own, with an agreed-upon offset. Mark McClellan, a health care expert at the Brookings Institution, suggested, as Kind did, that lawmakers could look toward other aspects of federal health care spending for savings, even within the ACA.

• Lawmakers could also attach a repeal bill to a broader tax reform package. But modern attempts at so-called “comprehensive tax reform” have turned out to be the legislative equivalent of Bigfoot: much discussed, often sought after, rarely seen in the wild and, until evidence proves otherwise, probably a myth.

• McClellan suggested lawmakers could pass a repeal bill annually, with some kind of spending offset attached each time (in other words, finding about $3 billion a year, rather than $29 billion all at once). Congress does this with the “doc-fix,” a yearly exercise in which Congress delays Medicare reimbursement cuts to doctors.

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Comments (8)

  1. Submitted by Ray Schoch on 01/09/2015 - 11:51 am.

    Interesting figures

    Hmmm. More than 400 device companies? Employing somewhere near 34,000 people?

    How many of those device companies are profitable WITH the tax, which is, after all, 2.3 percent, not 20.3 percent.

    Having not read of any wave of company bankruptcies due to the crushing burden of this tax, it seem reasonable to ask, if the device tax is repealed, whether those 400 companies reduce their prices to customers by 2.3 percent. If not, then Minnesota’s Congressional delegation is serving the interests of the shareholders of those companies at the expense – literally – of insurance companies, hospitals, physicians and THEIR employees, not to mention thousands of “customers” in the form of patients whose health, sadly, depends on those devices. A related question might be whether Medtronic will continue its pursuit of offshore tax avoidance if this tax is repealed. If so, there’s even LESS reason to support repeal of the tax than appears on the surface.

    ‘Twould appear that a fairly small number of corporations are more important to the GOP (and Minnesota’s Congressional DFL members) than the public.

    • Submitted by James Hamilton on 01/09/2015 - 12:29 pm.

      As VP Mondale might have asked,

      “Where’s the beef?”

      This is an excise tax of the type typically passed on to end users. The law was carefully crafted to prevent it from affecting foreign sales (exempt) or from creating an advantage for foreign manufacturers. (It applies to all devices sold in the U.S., regardless of where manufactured.) It seems that domestic manufacturers have chosen not to pass the tax on to end users. So be it. But those who have looked at manufacturers’ claims of job losses and other ill effects have found the claims to be questionable at best.

      Is is really as simple as $2.9 billion a year in profits? If repealed, what’s the return on investment for the manufacturers’ political contributions?

      It seems the entire Minnesota delegation is too ******* **** to run the risk of being labeled anti-jobs or to forego those contributions to say no to Medtronic, et al.

      • Submitted by Steve Titterud on 01/09/2015 - 03:38 pm.

        ROI on political bribery is FANTASTIC !!

        You can’t get this kind of return anywhere else, any other way.

        And it doesn’t matter if your company or industry is already making money hand over fist – rather, this makes it MORE LIKELY you’ll find a warm reception for your legislative maneuvering in both House and Senate. One hand washes the other !!

        If you want to make some real money and earn a return on other people’s money, then become a lobbyist for outfits like Medtronic, promising them an increase in their already fat bottom line. If you want hefty support from the MN delegation, wave a little of that campaign cash under their noses.

        This is not about helping a struggling industry. It’s about helping the successful avoid paying their fair share.

  2. Submitted by Eric Ferguson on 01/09/2015 - 04:25 pm.

    Shame on the Minnesota delegation

    I guess provincialism survives. I don’t care that we have a bunch of the medical device industry here. Let them pay their share. The other medical industries have to pay for this windfall of new customers, but I guess the device industry thinks it’s special. Or at least their lobbyists are paid to think it’s special, and our congressional delegation is listening to them.

    Shame mostly to Erik Paulsen. He was fine with cutting off people living on nothing but their SNAP or unemployment insurance, but he sure hears the cries of Medtronic to the point of seeming one-issue about this.

  3. Submitted by Jim Graves on 01/09/2015 - 04:38 pm.

    Medical Device Tax – Rep Paulsen

    Listening to Rep Paulsen on MPR, yesterday morning, he made the claim that we need to repeal the device tax so that our local companies can be competitive in the global market. If he wants to assist local companies and their profitability, so be it – simply be honest and quit the non-sense. Paulsen knows full well that regardless the domain of a device maker, foreign or domestic, the tax applies equally.

  4. Submitted by Dennis Wagner on 01/09/2015 - 09:23 pm.


    Rep. Paulsen seems Medtronic had no problem picking up a $63 million Tax bill for the Executives! So what is all the crying about! You expect us to shed crocodile tears for guys making gazillions and their company paying ga-Millions in Tax coverage. Give us a break dude! more dough than most of us would make in a 120 life times.

  5. Submitted by Tom Anderson on 01/11/2015 - 04:53 pm.

    The easy answer for the $29 billion

    Print the money. The federal government has done it for everything else, why discriminate now? A harder problem will trying to replace all the “savings” that the ACA is supposed to be pouring into the federal coffers.

    As an aside, has everyone noticed how all “savings” or “costs)”are spread out over ten years now? It makes it sound like we’re saving more. If you say $2 billion per year with an almost $17 trillion dollar national debt it just doesn’t sound like real money.

  6. Submitted by richard owens on 01/12/2015 - 08:56 am.

    Not to be a tough guy, but

    I suggest the MN GOP members just plain STOP speaking out and acting on fiscal matters until they can show they pay their own bills and have the discipline to spend within their own budgets.

    Is it too much to ask that this party show they can WALK THE WALK?

    Folks are sick of their hypocrisy. It doesn’t matter if it is caused by ignorance, stupidity or opportunism.

    They should just be mum until they learn basic money management.

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