From our Lobbyist – John Weinfurter
Please note the following medical device tax non-binding resolution. 

Background & Context:

The Senate gave sweeping bipartisan approval in a vote of 79-20 Thursday night on an amendment by Sen. Orrin Hatch (R-UT) and Sen. Klobuchar (D-MN) to repeal the 2.3% tax on sales of pacemakers, surgical tools and other devices. Strikingly, 34 lawmakers who caucus with the Democrats signed onto the repeal, including many who created the tax by voting for the 2010 Affordable Care Act.

Those Democrats who support the amendment said that they would to find a way to generate the same amount of revenue before they would vote to pass it into law. The amendment approved Thursday specified the tax should be repealed without increasing the federal budget deficit.

The tax—a 2.3% excise tax on all US sales—covers medical equipment ranging from implantable pacemakers and hips to healthcare machinery such as MRI machines and infusion pumps, as well as the plastic tubing, surgical tolls and other supplies that stock hospital shelves. Since the tax took effect on Jan. 1, the device industry has paid $388 million in excise taxes, collected by the Internal Revenue Service in bimonthly installments.

Outlook:

Because Thursday’s measure was an amendment to the Senate Democrats’ budget—a partisan blueprint that stands little chance of passing the GOP-led House—the vote to repeal the tax was largely symbolic. Lawmakers are unlikely to bring forward the measure as a stand-alone bill on the Senate floor and will push instead to have it considered in broader discussions to overhaul the tax code and reduce the deficit.

Device manufactures have argued the tax is unfair because they will not gain enough new customers from the health-care overhaul to offset their new costs. Device makers view the wide bipartisan support for the repeal as a signal that their thee-year effort to repeal the tax could succeed.

In conversations with two prominent staff involved in the bi-partisan tax reform effort, one a Majority staffer (R) in the House on House Ways and Means and one a Majority staffer (D) in the Senate on Senate Finance Committee, there appears to be a widespread belief that this was a trial balloon. Both staff believe that a repeal of the medical device tax could be a “sweetener” in tax reform, if and when the House and the Senate get that far down the road. I do sense that the Republican staffer in the House and Democratic staffer in the Senate were surprised by the margin of the vote in the Senate and the relative unhappiness in the Senate Chamber over the tax itself. Many device firms in the states of Ways and Means Members and Senate Finance Committee Members have weighed in on the medical device tax and the anti-jobs message it sends forth. Tax reform is a Dave Camp-Max Baucus vehicle at this juncture, so we’ll have to see how staff in each Chamber look at the revenue generated by the tax ($388M to date) and measure that against the impact on growth and job creation in a wide variety to tech-centric Congressional Districts around the nation.