Medical device tax could kill 11 percent of U.S. med-tech jobs, AdvaMed says

September 7, 2011 by Emily Greenhalgh

An excise tax on medical devices, set to go into effect in 2013, could mean a nearly 11 percent cut for the U.S. medical technology sector and add $2.67 billion to the industry's annual tax bill, according to a study funded by the Advanced Medical Technology Assn.


Medical device industry lobby AdvaMed says that the new 2.3 percent excise tax, slated to go into effect in 2013, will be "the last straw on the camel's back" for medical device companies trying to thrive in the struggling American economy. 

The tax puts more than 43,000 U.S. jobs at risk by all but forcing medical device companies to move production offshore to avoid higher taxes, according to the study.  

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"The medical device industry is a leader in innovation and in well-paying jobs," lead author and Manhattan Institute senior fellow Diana Furchtgott-Roth said on a conference call. She argued that the government should make the US a more "job-friendly environment" instead of imposing taxes that could push companies outside its borders. 

The tax's effects would be felt most in states that are currently hubs in the medical device industry, Furchtgott-Roth said, including Massachusetts, Minnesota, Indiana, California and Colorado.  "We are not in a strong economic position," added Furchtgott-Roth. "This is not the right time to impose a new tax."

"This study comes at a critical time as Washington focuses on job creation," president & CEO of AdvaMed Stephen Ubl said in a prepared statement. "As the administration and Congress work to address this issue, it's important for them to understand the device tax is counter-productive to economic growth and the shared aim of putting more Americans to work."

Ubl went a step further, calling the 2.3 percent excise a "tax on innovation," because start-up companies are required to pay the full tax regardless of their net-revenue margin.