WARSAW — Following the House passing The Protecting Americans From Tax Hikes Act of 2015, many are celebrating what they will believe of huge benefit to those in the medical device industry. The act, titled PATH for short, will suspend the medical device tax and make the Research and Development Credit and Section 179 expensing permanent according to a release from Rep. Jackie Walorski (IN-02).
Locally, Kosciusko County Economic Development Director George Robertson noted the suspension of the medical device tax would come as a relief to many in the orthopedics industry, especially smaller businesses. Robertson noted that the industry was already experiencing a push to reduce the cost of the high priced products they produce, causing these companies to look for cost saving measures. However, when the device tax was implemented, this added addition strain to companies as the government was now taking a chunk of profits via taxes.
Though Robertson notes many larger businesses such as Zimmer-Biomet and Depuy were able to weather the changes, many smaller device companies just entering the market, such as Nextremity Solutions and OrthoPediatrics, were hit hardest by the tax.
“This is very positive for individuals in the orthopedics industry,” stated Robertson. “This will be helpful as they plan for the next year and I believe you may see growth and job creation next year.”
Several state officials are also tipping their hats to the suspension including Walorski and Governor Mike Pence.
“Today, the House took meaningful steps to give certainty to individuals, families, charities and job creators by making numerous temporary provisions of the tax code permanent. For instance, the Research and Development Tax Credit has been temporary for decades, leaving Congress to pass 16 short-term extensions of this important credit. This means that for decades, innovators have been left in limbo, uncertain if they should make new investments in the U.S. or somewhere else,” stated Walorski in a release.
“Making the R&D credit permanent will give innovative industries the confidence to invest here. Indiana is home to 300 medical device companies, employing over 20,000 people, and stands to benefit greatly from this certainty. I am also happy that we are delaying the damaging medical device tax for two years – this misguided tax will cost jobs and harm patients and I look forward to the day we see it repealed in full,” continued Walorski. “Today also represents an important step toward reforming our broken tax code and I look forward to further progress toward that goal.”
Pence, who notes he is a long-time advocate of the repeal of Obamacare and the medical device tax also issued a statement of support today noting he considers the tax a “job killer.”
“The medical device tax is a job killer in Indiana,” stated Pence in a release today. “Hoosier-based medical device companies and the thousands of Hoosiers employed in this industry should applaud the news that Congress has acted to suspend this onerous Obamacare tax for two years.
“Indiana ranks second in the nation when it comes to the export of life sciences products. I have heard, time and again, from medical device companies throughout Indiana that the medical device tax has forced these employers to reduce operations and wages or put expansion plan on hold,” continued Pence. “The life sciences industry has a $59 billion impact on Indiana’s economy, employing more than 56,000 Hoosiers with 20,000 of them in medical device-related jobs.”