2016-01-19 / Front Page

Suspension Of Medical Device Tax Among Tax Cut Extensions

by Michael Stanley
Staff Writer

A substantial spending bill and tax break package approved by the United States Congress in late December successfully suspend the long debated 2.3 percent medical device excise tax.

The suspension, set to last two years, occurred on December 18 when President Barack Obama signed a $1.8 billion taxation and spending bill.

Under the terms of the agreement, known as the Consolidated Appropriations Act 2016, the medical device excise tax will now not be eligible for reinstatement until the 2018 fiscal year.

According to a recent estimate from the Non-Partisan Joint Committee on Taxation the suspension of the medical device excise tax is estimated to subtract $3.4 billion from the federal budget between 2016 and 2017. The tax was expected to raise almost $30 billion over 10 years to help pay for the Affordable Care Act, President Obama’s landmark health care law.

“Despite disingenuous claims by some who opposed this legislation to fight for tax increases, maintaining current tax policy by renewing these tax breaks, like we do every year, does not increase the deficit,” Indiana 8th District Congressman Dr. Larry Bucshon (R-Evansville) commented. “This important legislation has significant policy wins that make life easier for Hoosier families who are trying to plan for the future. It delays the medical device tax that is hampering life-saving innovation and permanently extends a provision that helps farmers and small businesses plan large expenditures on equipment so they can invest in our local communities. Most importantly, it keeps more money in the pockets of taxpayers and away from bureaucrats in Washington, D.C.”

Bucshon’s eighth district houses 17 of Indiana’s more than 300 medical device manufacturers and the industry employees more than 20,000 Hoosiers. Across the state, more than 300 companies are dedicated to the industry, also providing an additional 28,800 positions in the supply aspect of business.

According to the Indiana Medical Device Manufacturers Council, the industry contributes nearly twice the national private sector job growth and has provided a 17 percent increase in economic output since 2007. The Hoosier State ranks seventh in the country’s medical device employment, as the industry produces $10 billion in economic output annually.

Among those locally is Cook Group, Boston Scientific, and Medical Polymers. Cook employees more than 9,000 across the world, and a total of 543 at Cook Urological in Spencer. Boston’s employees total more than 25,000 worldwide, with 1,000 employed at the Spencer facility.

Also operating in Owen County since 1986 is Medical Polymers and its 20 employees in their downtown Spencer facility.

A press release issued by Cook Medical applauded the successful effort by Congress, speculating an increase in industry jobs and a lax financial environment for the economic sector.

“Cook Medical would like to thank our congressional delegation for their leadership in suspending this burdensome tax on medical device companies,” Cook Group Chairman Steve Ferguson said. “Since the tax’s implementation in 2013, U.S. medical device companies large and small have been forced to limit the expansion of U.S. manufacturing facilities, reduce research and development, and decrease hiring.

“Given a two-year suspension, we hope to resume expansion in the United States. As we make our plans to develop here at home, we look forward to working with our congressional leaders to repeal the medical device tax altogether. This is crucial to the U.S. medical device manufacturing industry and more importantly provides jobs and helps patients by ensuring delivery of advanced medical technologies to those who need it the most.”

Boston Scientific also issued a statement, noting, “As a leader in medical innovation, Boston Scientific searches constantly for new ways to improve patient care. Our work to develop transformative technologies depends on our ability to take calculated risks and make strategic investments, which are challenged by the Medical Device Excise Tax. Boston Scientific is pleased that Congress has passed a two-year reprieve, and we look forward to working toward a permanent repeal.”

A press release issued by Bucshon’s congressional office also outlined several key inclusions in the legislation:

•Additional child tax credit made permanent.

•Extension of tax-free distributions from individual retirement plans for charitable purposes.

• Extension and modification of research credit.

• Extension and modification of increased expensing limitations and treatment of certain real property as section 179 property. The provision permanently extends the small business expensing limitation and phase-out amounts in effect from 2010 to 2014 ($500,000 and $2 million, respectively). These amounts currently are $25,000 and $200,000, respectively. This allows small businesses and the agriculture industry to plan large expenditures on equipment encourages economic activity in rural areas.

•Extension of abovethe line deduction for qualified tuition and related expenses.

•Extension of mine rescue team training credit. The provision extends through 2016 the mine rescue team training tax credit. Employers may take a credit equal to the lesser of 20 percent of the training program costs incurred, or $10,000.

•Extension of election to expense mine safety equipment.

•Prevention of retroactive claims of earned income credit after issuance of social security number.

•Prevention of retroactive claims of child tax credit.

•IRS employees prohibited from using personal email accounts for official business.

•Release of information regarding the status of certain investigations.

•Administrative appeal relating to adverse determinations of tax-exempt status of certain organizations.

• Termination of employment of Internal Revenue Service employees for taking official actions for political purposes.

•Educator Tax Deduction. For the first time, the tax extender package permanently extends the educator tax deduction, indexes the deduction cap to inflation, and includes professional development as a deductible expense. This permanent extension will provide relief to educators across the country that incur out-of-pocket expenses on classroom supplies and professional development. It helps ensure each educator has the resources, mentoring, and support professional needs so they can inspire students’ natural curiosity, imagination, and love of learning.

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