Could device-tax repeal be blowing in the wind?

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Recognizing that in order to repeal the Affordable Care Act’s 2.3% medical device tax, there likely needs to be a means for financing such a move, the National Center for Public Policy Research’s Free Enterprise Project (FEP) is promoting a solution could be more than just a lot of hot air.

During General Electric's annual meeting of shareholders last month, Justin Danhog, director of the FEP, presented GE CEO Jeffrey Immelt with a plan to repeal the Affordable Care Act’s medical-device tax. The plan financially balances the repeal by simultaneously ending taxpayer subsidies to the wind power industry.

"Mr. Immelt seemed sincerely interested in evaluating our efforts to end both the medical-device tax and federal subsidies for wind power," says Danhof. Immelt noted that he had not heard of our specific idea, but seemed to think it merits earnest consideration."

According to a report by the Milwaukee Business Journal, the device tax could cost GE Healthcare Services between $100 million and $150 million annually. Danhof presented Immelt with the proposal, which is analyzed in a paper by National Center health care analyst David Hogberg.

The National Center has concluded that repealing the medical-device tax while ending the wind- production tax credit would lead to a net increase in US jobs. Conversely, the National Center says that nearly 20% of US medical device manufacturers expect to lay off employees because of the medical-device tax.

Meanwhile, a study published in March by the American Energy Alliance and the National Center found that employment benefits of wind subsidies have been grossly overestimated by lobbyists.

"The medical device industry produces devices that save lives and improve health," explains the paper's author, David Hogberg. "By contrast, the wind-energy industry produces less than 2% of the nation's electricity, despite decades of tax credits and government subsidies. Repealing the medical device tax will eliminate a burden on an industry that provides great value for Americans. Eliminating the two-decade-old wind-energy production tax credit will not only help replace some of the revenue from the medical device tax, it will end a tax credit for an industry that provides little benefit for the US."

The same proposal was presented to Stryker CEO Kevin A. Lobo at the company’s annual meeting of shareholders. Stryker announced last year that it would lay off 1,170 workers, approximately 5% percent of its workforce because of the device tax.
Whether the proposal will impact decision makers in Washington remains to be seen. 

Discuss this Blog Entry 2

on May 14, 2013

It seems like the Republican Party and their proponents never miss an opportunity to miss an opportunity. This Right Wing linkage of tax repeal with wind subsidies is an automatic non-starter. One cannot hope to win over the Democratic opposition by stacking the deck with plusses and minuses totally in one's favor.

Paul Stein

on May 14, 2013

Hi Paul,
Thank you for taking the time to share your opinion. What is your job title and for what company do you work?

Please or Register to post comments.

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