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Medical Device Excise Tax Repeal on Table


 Stethoscopes Are Subject to the Medical Device Excise Tax

The Medical Device Excise Tax (MDET) took effect on January first of this year. Under MDET, manufacturers and importers of medical devices are required to pay a 2.3% excise tax on sales of certain medical devices. Revenue generated by the tax funds healthcare reform under the Affordable Care Act. H.R. 523, or the Protect Medical Innovation Act, would repeal the new excise tax.

Pursuant to relevant Internal Revenue Code, taxable medical devices are defined as "any device (as defined in section 201(h) of the Federal Food, Drug, and Cosmetic Act) intended for humans." Exempt items include, but are not limited to, eyeglasses, contact lenses, and hearing aids.

The National Association of Manufacturers (NAM), the largest manufacturing association in the country, opposes the medical device excise tax. The organization reports that "manufacturers are already experiencing significant, negative consequences on job growth and innovation" as a result of the tax. Furthermore, they report that "as many as an estimated 43,000 jobs will now be at risk as a result of this tax."

Last fall, the Wall Street Journal reported that Welch Allyn, maker of stethoscopes and blood pressure cuffs, "would lay off 10% of its global workforce over the next three years" because of the tax. All those job losses were planned for the United States. And Welch Allyn is not the only company to reduce their workforce in response to the tax.

If such layoffs were intended to pressure politicians into acting, they may have worked. H.R. 523, sponsored by Representative Erik Paulsen (R-MN), was assigned to a congressional committee on February 6, 2013. The bill has 178 cosponsors: 158 Republicans, and 20 Democrats.

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Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Gail Cole
Avalara Author
Gail Cole
Gail Cole
Avalara Author Gail Cole
Gail began researching and writing about sales tax in 2012 and has been fascinated with it ever since. She has a penchant for uncovering unusual tax facts, and endeavors to make complex sales tax laws more digestible for both experts and laypeople.