Budget deal cues up 2-year freeze to medical device tax
Updated 2:05 p.m. | Posted 10 a.m.
A federal budget proposal brought good news Wednesday for Minnesota's medical device companies by freezing for two years a tax on products like pacemakers and ventilators that they have long opposed.
The package of tax cuts and spending cued up for final votes in Congress this week would suspend the 2.3 percent excise tax on those devices, ultrasound machines and more that took effect in 2013 as part of the funding mechanism for President Barack Obama's health care law.
Create a More Connected Minnesota
MPR News is your trusted resource for the news you need. With your support, MPR News brings accessible, courageous journalism and authentic conversation to everyone - free of paywalls and barriers. Your gift makes a difference.
That tax has been a constant target for Minnesota lawmakers in Congress, who have cited the state's large presence in the medical device industry as they pushed for its repeal — from big names like Medtronic and St. Jude Medical to more than 400 smaller companies. The sector employs more than 35,000 Minnesota residents.
Though the budget deal stops short of the full repeal he and others have sought, Rep. Erik Paulsen said the wide-ranging support for the freeze — including the White House's blessing — shows "that we can get this across the finish line for permanent repeal."
"This is really important as companies continue to grow and sell to other countries around the world," the Republican congressman said. "For the next two years, Minnesota companies are not going to be unfairly paying a tax based on their revenue, rather than on their profits."
In the short term, Paulsen said he expects the tax suspension through 2017 will allow companies large and small to spend more to research and develop new products and hire more engineers.
U.S. Sen. Amy Klobuchar said in a statement that she'd keep working with Paulsen and others to make the suspension permanent.
"Doing so will improve patients' lives, create well-paying jobs and give Minnesota businesses the certainty and stability needed to keep researching, inventing and developing the next lifesaving medical breakthrough," the Democratic senator said.
A vote is expected in both chambers of Congress on the compromise deal later this week.