House Vote on H.R. 436 Reflects a Home State Issue with National Impact

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After weeks of public campaigning, the movement to repeal a medical device manufacturer tax that will impact all makers of medical devices, including imaging equipment manufacturers, is scheduled to come to a vote this week in the House of Representatives.

Although the Senate votes aren’t expected to be there for a companion bill to H.R. 436, the Protect Medical Innovation Act of 2012, House Republicans view it as a symbolic challenge to a tax they say will stifle innovation, send more jobs overseas, and make it harder for smaller companies to compete.

“If a business sells $100 million worth of products and [earns] a $4 million profit, the $2.3 million it would owe would erode more than half its earnings -- excluding federal and state corporate taxes,” an AP report pointed out.

Opponents of the measure argue that because the device tax applies to imported goods as well as those manufactured in the United States, a protectionist argument doesn’t necessarily apply in this case.

"The tax applies equally to imported and domestically produced devices, and devices produced in the United States for export are tax-exempt," wrote Paul Van de Water for the Center on Budget and Policy Priorities, a national fiscal policy thinktank. "The excise tax is one of several new levies on sectors that will gain business due to health reform...expansion of health coverage will increase the demand for medical devices and could offset the effect of the tax. "

According to a June 4 assessment from the Congressional Budget Office, repealing the 2.3 percent tax would reduce revenues by $29.1 billion from 2013 through 2022.

Philip Minardi, a spokesperson for Congressman Erik Paulsen (R - Minnesota), told Imagingbiz that although the timing of the legislation makes it an election-year issue, it’s foremost a home-state concern for the Minnesota representative, who introduced the bill in 2011. Minnesota is home to a strong medical device industry that employs 35,000 workers, Paulsen has said.

In the House, the bill has nearly 240 cosponsors, 11 of which are Democrats; U.S. Senator Orrin Hatch (R – Utah) has introduced a companion bill in the Senate.

Both of Minnesota's Democratic U.S. Senators -- Amy Klobuchar and Al Franken -- have gone on record as supporting repeal of the tax, even though the tax is favored by most Democrats. Despite their support, the Senate version of the tax repeal bill is expected to fail in the Democratically controlled Senate.