Congressman Mike Fitzpatrick provided local manufacturers with important tax relief today with his vote for the "Health Care Cost Reductions Act" to repeal the medical device tax included in the President's healthcare law. Fitzpatrick was joined a bipartisan majority in the House in sending this important legislation to the Senate for its approval.
"This tax, left unchallenged will kill jobs, increase healthcare costs, stifle innovation and threaten our already weak economic recovery," said Fitzpatrick. "The medical device tax is part of a larger tidal wave of tax hikes set to take place on January 1 as part of the President's healthcare law, and I am working to prevent this drag on our economy one piece at a time."
Tom Molz, President and CEO of the Stout Medical Group in Perkasie also warned of the dangers of the medical device tax: "This tax will force medical device companies to go to other countries, resulting in the loss of jobs and the loss of all other taxes generated by those jobs. The medical device industry is one of the few industries with a strong manufacturing base -- it would be very disappointing to lose this base, and the jobs associated with this industry."
In order to help pay for the President's healthcare legislation, a 2.3% tax on the sale of medical devices including things like defibrillators and MRI scanners was instituted to take effect on January 1, 2013.
The tax, which applies to U.S. sales, not profits, of medical device manufacturers, will be especially damaging to innovative start-up companies which tend to suffer losses in their early years when they are pouring money into research and development.
A study by the former chief economist of the Department of Labor and the former chief economist of the House Energy and Commerce Committee has found that the tax will result in the loss of 43,000 jobs and $3.5 billion in lost wages and benefits.
In addition to repealing the medical device tax, this legislation (H.R. 436) eliminates current limitations on the use of health-related savings accounts to purchase over-the-counter medications, allows Americans to keep unspent funds from their Flexible Spending Arrangements, and corrects a mistake in the President's healthcare law which over-paid on insurance subsidies.