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Medical Device Tax Suspension

Branded a job-killer when it was introduced, the Medical Device Excise Tax was temporarily suspended starting January 1st of 2016, until the end of 2017. The tax was created to impose an excise tax on the sale of certain medical devices by the manufacturer or importer of the device.  This tax had been fought over for years, since it was implemented as part of the Patient Protection and Affordable Care Act in 2013. Interestingly enough, the suspension of the tax has seen support even from parties who were in favor of the tax in the first place, as it failed to generate the income they were expecting while disrupting the medical device industry far more than they expected.

The suspension of this tax could help the medical manufacturing industry in a number of ways:

  • Reinvigorated Research and Development – Many companies had to cut back on research and development to ensure they were able to pay the tax. Now with it suspended this money can go back to research and the development of new products.
  • Capital Improvements – Also hit hard by the tax, some companies were forced to put off upgrading to newer, more efficient equipment, and now will be able to reinvest what was once headed to taxes into improved equipment and facilities.
  • Renewed Hiring – Many companies have indicated that in addition to investing the money back into capital, they desire to invest it into the workforce. While this may not have a major effect on the overall unemployment countrywide, it will certainly help in regions that already have a solid foundation of medical device manufacturers.
  • Revitalizing an Industry – When the medical tax went into effect, the medical device industry was already dealing with stringent regulatory and reimbursement procedures, and the tax put further weight on an industry that was already fighting to keep up with overseas manufacturers from Europe and Asia. The removal of a roadblock should help keep the industry active and entice companies to continue working in the United States.

At Swiss Precision Machining, Inc. we work with the medical industry to make parts and components for robotic surgery parts, orthopedics, and heart valve replacement equipment among many others.  We look forward to the positive impact the medical device tax suspension will have on the growing medical device industry and will continue to make high quality products that will meet all our customer’s needs.

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