5. Tax reform without a medical device tax repeal
Congress delivered a major tax overhaul bill to President Donald Trump’s desk before Christmas. But it surprisingly didn’t include an item that the medical device industry had been craving: permanent repeal of the 2.3% medical device excise tax that was part of the Affordable Care Act. A hold placed on the tax in 2016 is set to expire at the end of 2017.
“In 11 days, the medical device excise tax is set to be reinstated, meaning a massive tax increase is on its way,” AdvaMed CEO Scott Whitaker wrote in a letter to Trump yesterday.
“I am writing to you to underscore the devastating impact this tax has and will have on our industry,” Whitaker said. “I know you have long supported repealing this onerous tax. I want to emphasize why, unlike other business taxes, retroactive relief from the device tax is not feasible and why action this year is essential.”
While Trump and congressional Republicans failed to dismantle Obamacare this year, the new tax bill repeals the individual mandate – undermining the economics behind the ACA.
The device tax is still in place, but the medtech industry appears to have dodged a bullet with the tax reform: The R&D tax credit is still intact, though it appears to now be an amortization deduction over five years.