Plastics Business
Congress has suspended for two years the 2.3 percent medical device tax. This tax went into effect Jan. 1, 2013, as part of the Affordable Care Act. The tax required medical device manufacturers to pay the Internal Revenue Service a 2.3 percent tax on sales – not profits – which is an estimated average of $194 million per month. It inhibited access to medical devices and has had an adverse effect on the medical device industry, which employs an estimated 400,000 people.
US Rep. Elise Stefanik (R-NY) said in a letter to Speaker Paul Ryan in November: “The medical device tax is a tax on revenue, rather than profit, which means that the US device industry is subject to one of the highest corporate tax rates in the world. As you know, American companies represent 38 percent of the global market and this tax threatens our nation’s ability to innovate and stay competitive. Additionally, American companies must pay the tax even in non-profitable years. As companies look to make cuts to offset the tax, research and development is often one of the first items to go. This trade-off undermines the future of the industry and puts the discovery of new breakthrough medical technologies at risk.”
The performance plastics industry, as well as the International Association of Plastics Distribution (IAPD), had been lobbying for the action, said IAPD President Kevin Short. “Performance plastics are already vital to so many medical applications that it’s hard to imagine any medical facility without an abundance of these materials,” he said. “Performance plastics are necessary components of incubators that keep premature infants alive, antimicrobial knee and hip replacements, surgical instruments, hospital beds, pacemaker leads, X-ray and MRI machines, IV and infusion devices and many, many more applications. IAPD’s members make, distribute and fabricate the performance plastics that make all of this life-saving equipment possible. The 2.3 percent tax was a tremendous burden on our members and it had a detrimental effect on research and development. Our industry is involved in exciting and innovative developments, which are improving life in a multitude of industries, including the medical profession. Our members can now, at least for the next two years, continue to innovate without the undue burden of this tax. We encourage Congress to make this suspension permanent.”
Performance plastics excel in medical applications because they maintain their physical properties under thermal, chemical or electrical stress, can handle repeated sterilization, are lightweight, offer excellent wear properties and meet health regulations. They are often the best, most cost-effective material for a medical application.
For more information, visit www.iapd.org.
