A comprehensive tax reform plan put together by Rep. Dave Camp (R-Mich.) would do away with the medical device tax contained in Obamacare, but the package appears to be a dead letter in Washington after Republican leaders cast doubt on its chances for a vote this year.
Camp, chairman of the House Ways & Means Committee, said it’s high time the U.S. overhauled its tax code, which hasn’t seen a major revision since 1986.
"The tax code should make it easier for American companies to bring back profits earned overseas so they can be invested here. It should not hinder small businesses from growing into large businesses. And the individual income tax needs to be simpler, fairer and flatter for everyone," Camp wrote in an op-ed in the Wall Street Journal this week. "The guiding principle is that everyone should play by the same rules—your tax rate should be determined by what’s fair, not by who you know in Washington."
Among a raft of changes, Camp’s plan would "flatten" the code by reducing rates and collapsing taxpayers into a pair of brackets: 10% and 25% of all taxable income, "ensuring that over 99% of all taxpayers face maximum rates of 25% or less," according to his website. It would also set the corporate tax rate at 25%.
And it would roll back the medical device tax as part of an effort to control healthcare costs, according to the website.
"While the plan generally leaves Obamacare policies untouched and for a later debate on healthcare, there are 2 main exceptions given strong bipartisan support for: (1) repeal of the medical device tax and (2) repeal of the medicine cabinet tax, which prohibits use of funds from tax-free accounts to purchase over-the-counter medication without first obtaining a prescription," according to the site.
The medical device lobby was predictably quick in heralding Camp’s inclusion of the medtech tax repeal provision. Mark Leahey, president & CEO of the Medical Device Manufacturers Assn., said his group is dead-set on doing away with the tax, a 2.3% levy on all U.S. sales of prescribed medical devices.
"MDMA appreciates the ongoing efforts to advance repeal of the medical device tax, and will continue to work with the strong, bipartisan majorities in the House and Senate who are committed towards this goal. Chairman Camp recognizes that this policy is destroying jobs and harming innovation, and we look forward to building more momentum to put an end to the device tax once and for all," Leahey said in a statement.
Stephen Ubl, president & CEO of AdvaMed, said his group favors comprehensive tax reform and is "carefully reviewing the proposal for other important tax elements that could have significant impact on the future of R&D and small company capital formation."
"We commend Chairman Camp for this blueprint and for continuing to advance comprehensive tax reform. We are very pleased Rep. Camp has included repeal of the medical device tax in his priorities for comprehensive tax reform. This $30 billion tax is a drag on job creation, economic growth and medical progress and repealing this onerous tax enjoys broad bipartisan, bicameral support," Ubl said in prepared remarks. "Repealing the device tax is a fundamental part of overall tax reform and will preserve U.S. leadership in this dynamic global industry. The more than two million men and women who work for or support this industry applaud Rep. Camp for including it in his plan."
And Gail Rodriguez, executive director of the Medical Imaging & Technology Alliance, lauded inclusion of the "job-killing" tax in Camp’s plan.
"MITA applauds Rep. Camp for prioritizing repeal the burdensome medical device tax that has required medical device manufacturers to pay an estimated $2.6 billion to the Internal Revenue Service (IRS) to date," Rodriguez said in a statement. "This tax poses an undeniable threat to the health of American patients and the economy by restricting investments in life-saving innovations and jeopardizing thousands of U.S. jobs."
But even before it was released, top Republicans derided the Camp plan’s chances of ever seeing the light of day, The Hill reported. House speaker Rep. John Boehner (R-Ohio) "scoffed" at the possibility of a vote this year, the website reported, while Senate minority leader Sen. Mitch McConnell (R-Ky.) imputed that it might be better to wait until the next Congress convenes in 2015.