Tax_155335696According to a newly released survey by the Massachusetts Medical Device Industry Council (“MassMEDIC”), medical device company executives say the federal medical device excise tax (“MDET”) has hampered industry development, leading to job reductions, reduced research and development spending, and an increased tax compliance burden.

In a poll completed by 24 of MassMEDIC’s 197 primary member companies:

  • 96% reported their company reduced employment by up to 25% as a result of the tax.
  • 71% reported their company slowed or halted U.S. job creation because of the MDET.
  • 79% of respondents said their company’s research and development/innovation activities had been reduced by up to 25% due to the MDET.
  • Approximately 88% reported experiencing MDET reporting/processing issues with the Internal Revenue Service.
  • Approximately 52% said their company moved operations and/or expanded outside of Massachusetts because of the tax.

The MDET, a 2.3% sales tax on medical devices, went into effect in 2013. Over the next decade the tax is projected to collect $38 billion toward funding healthcare reforms implemented under the Affordable Care Act. Congress has debated repealing or delaying the MDET as it considers taxation and spending bills. Meanwhile, industry leaders have expressed concern that the MDET is slowing industry growth and hampering the development of innovative healthcare solutions.

Massachusetts, home to MassMEDIC, is one of the largest medical device producers in the United States.