Updated July 30, 2014 with comment from MassMEDIC
Massachusetts Gov. Deval Patrick is establishing a special commission to study granting a tax credit to the Bay State’s medical device companies to offset the medical device tax.
As part of the Commonwealth’s fiscal 2015 budget, Patrick is charging the secretaries of administration & finance and housing & economic development with chairing the commission. The panel is slated to examine the potential cost of an offset, its potential benefit for medtech makers and the credit’s economic impact on the state budget.
The commission will have until June 30, 2015, to issue its report, according to the Massachusetts budget approved by Patrick July 11.
The panel will also include the chairmen of the Massachusetts House and Senate joint committees on revenue; the chairmen of the joint committee on economic development & emerging technologies; a member of the Senate and a House member appointed by the minority leader; a representative from the Mass. Medical Society; a representative from the Mass. Medical Device Industry Council (MassMEDIC); a representative from the Associated Industries of Massachusetts; and a representative from the Donahue Institute at the University of Massachusetts, according to the budget.
"The commission shall file a report detailing its work, findings and the feasibility of such a credit, including any legislative recommendations, with the clerks of the house of representatives and the senate not later than June 30, 2015," Patrick wrote.
“By authorizing this commission, Governor Patrick and the State Legislature recognize the serious effect the federal device tax has had on medtech companies in Massachusetts,” MassMEDIC president Tom Sommer told MassDevice.com in an email. “Millions of dollars are leaving this state that might have been spent on research and development on technologies that improve the quality of health care delivery.MassMEDIC looks forward to participating in the panel’s work and will make the case for a meaningful tax credit that could help mitigate the impact of the device tax.”
Medical device companies last year ponied up $1.4 billion in excise tax payments to the federal government to help pay for Obamacare, according to documents supplied to MassDevice.com by the Internal Revenue Service.
That $1.4 billion came during the 1st year of implementation of the 2.3% medical device tax, created in 2009 to help pay for the Affordable Care Act. The IRS supplied the total payments made last year in response to a May 14 Freedom of Information Act request filed by MassDevice.com. Federal officials have projected that the tax will raise about $30 billion over 10 years, but if the $1.4 billion-a-year rate holds the tax is on track to raise only $14 billion over a decade, less than half the projection.