Katko’s take on the two-year pause in Obamacare’s medical-device tax

A bill that President Barack Obama signed last Friday, Dec. 18, included a provision that places a two-year moratorium on the 2.3 percent tax on medical-device manufacturers.

The tax helps pay for the federal health-insurance law, known as Obamacare.

Congressman John Katko (R–Camillus), who represents the greater Syracuse area, voted in favor of the “Protecting American from Tax Hikes Act,” or PATH. He explained the significance of the law’s passage in a news release his office issued last week.

The medical-device tax posed a “unique threat” to Central New York’s economy “and on New York state as a whole,” the release stated.

New York’s medical-technology industry is the 8th largest in the nation, employing more than 8,000 employees in upstate New York, according to the news release.

Since taking office, Katko says he has been a “staunch advocate” for the repeal of the medical-device tax, serving as an original co-sponsor of a bill to repeal the tax.

“Under the onerous medical-device tax, innovators, small businesses, and manufacturers right here in Central New York and across the country have slowed hiring, slowed investment in research and development and in expansion … all in order to compensate for this misguided tax policy,” Katko said in the release. “Repealing this tax is critical to allowing our regional businesses to invest, to grow, and to prosper. [This] bipartisan legislation places a two-year pause on this significant tax burden, which is a critical first step forward in eliminating this harmful tax altogether.”

Reaction

At least one medical-device company with operations in Central New York and an industry trade group are praising the law’s passage.

“Our work to develop new technologies depends on our ability to take calculated risks and make strategic investments, efforts challenged by this medical device excise tax, which stifles innovation and reduces our ability to invest in R&D. Hill-Rom and Welch Allyn are grateful that Congress passed a two-year reprieve,” John J. Greisch, president & CEO of Hill-Rom Holdings Inc., said in the Katko news release.

Chicago, Illinois–based Hill-Rom on June 17 announced its acquisition of Skaneateles Falls–based medical-device maker Welch Allyn Inc. The new owner on Sept. 8 announced the completion of the acquisition.

Greisch hopes that Congress will eventually “permanently repeal this onerous tax,” referring to the medical-device tax.

MedTech “applauds” members of the New York congressional delegation for their “unwavering” support to repeal the tax, Jessica Crawford, president of Syracuse–based MedTech Association, said in the Katko release.

“Suspension is an important step toward full repeal of the medical device tax and preserving more than 13,000 jobs and $4.6 billion in economic impact across New York. The efforts of our delegation will help boost innovation, job creation and patient care,” said Crawford.

MedTech represents nearly 350 medical-technology companies across New York.

Other provisions

Besides the two-year pause on the medical-device tax, the PATH law also provides a two-year extension for alternative fuel-tax credits that the Centro bus system “heavily” utilizes, Katko’s office said.

The new law also extends tax-relief policies, makes the enhanced child tax credit permanent, and provides “important enhancements” to the American Opportunity Tax Credit and the Earned Income Tax Credit.

Those provisions offer Central New York families the certainty that they need to plan, Katko’s office added.

The new law also makes the research and development tax credit permanent for the first time in 34 years, offering incentives for small-business “innovation.”

The measure also prevents tax increases for small businesses and extends tax credits to “promote small-business growth, innovation, and investment.”

In addition, it places a two-year pause on the “Cadillac tax” on expensive health-insurance plans.

Contact Reinhardt at ereinhardt@cnybj.com