Evan Bayh, the former governor and Democratic senator from Indiana who’s now doing some lawyering for medical device companies, wants his former Senate colleagues to repeal the medical device tax before it goes into effect next year.
Calling it "ObamaCare’s tax raid on medical devices" in an op-ed piece written for the Wall Street Journal, Bayh wrote that the tax will devastate a healthy U.S. industry that leads the world in developing medical technology.
"Given the fragile state of the U.S. economy, Congress must move quickly to redress the harm from this tax before it becomes irreversible," Bayh wrote. "The hit will be severe. For a typical company, a 2.3% tax on revenues equals a 15% tax on profits. When combined with a 35% corporate tax and state corporate taxes, the tax rate for the medical device industry will exceed 50% in most jurisdictions. Many marginally profitable businesses will then hemorrhage red ink, since they’ll have to pay the excise tax whether they are making money or not."
Although the U.S. House of Representatives approved a measure to repeal the 2.3% excise tax in July, a companion bill in the Senate has yet to garner a Democratic sponsor, he noted.
"If Congress acts soon, however, most of the harm can be forestalled. There is hope. The House – 233 Republicans, joined by 37 Democrats – voted in June to repeal the tax. In the Senate, 33 Republicans are on record in support of doing the same," Bayh wrote. "While no Democrat has stepped up to co-sponsor the legislation, several speak favorably in private. Even Elizabeth Warren, the Democratic Senate candidate from Massachusetts and a staunch progressive, has now come out in favor of repeal."
In writing the editorial Bayh becomes a member of the select few Democrats advocating for repeal. Last week, Sen. Kay Hagan (D-N.C.) expressed her support for repealing the tax; Massachusetts Senate hopeful Elizabeth Warren (D) drew national headlines after writing an exclusive opinion piece for MassDevice.comcalling for repeal.
In Minnesota, where Rep. Erik Paulsen (R) is spearheading the U.S. House push to repeal the tax, Sens. Amy Klobuchar (D) and Al Franken (D) have said they’re concerned about the impact it will have in the Land of 10,000 Lakes, home to 1 of the largest medical device industry clusters in the world. Sen. John Kerry (D-Mass.) has also expressed similar concerns for the Bay State, which also boasts a significant med-tech presence.
A Senate bill repealing the tax would require 60 votes. Assuming full buy-in from Republicans in the upper chamber, the repeal effort would need 13 Democrats to cross the aisle in order to get the measure to Obama’s desk. A House bill repealing the tax passed on a 242-173 bipartisan vote in June. The White House has promised to veto any such legislation, however.