MEDICAL EXCISE TAX (JAN. 1, 2013)
Anyone still believe Obama didn't raise taxes on the middle class?
What is the medical device tax?
The $20B tax was included in the Affordable Care Act that was signed into law in 2010. The amount is based on a 2.3% excise tax that will be levied on the total revenues of a company, regardless of whether a company generates a profit, starting in 2013. Many companies will owe more in taxes than they generate from their operations. The result will be devastating to innovation, patient care and job creation.
January 1, 2013 brought a host of new taxes, fees, and charges to the American people. Some of them were anticipated. Others, like the Medical Device Excise Tax (MDET), were not — at least not in this way.
How so? Well, the MDET has started showing up on the receipts for purchases made at sporting goods giant Cabela’s. This receipt from one such store in Texas is making the rounds on the web. It shows an additional tax has been added to the purchase, after the local sales tax of nearly 10% was charged.
Section 4191 of the Internal Revenue Code imposes an excise tax on the sale of certain medical devices by the manufacturer or importer of the device.Which devices will be affected by it?
There are two main categories of devices exempt from the tax. First, eyeglasses, contact lenses and hearing aids are specifically listed as being exempt. The second and broader category, commonly referred to as the “Retail Exception,” exempts a device which is “of a type which is generally purchased by the general public at retail for individual use.”
At the end of the day, the Medical Device Excise Tax was supposed to generate an additional $29 billion to help pay for Obamacare. During the deliberations of the 2009 law, the bill’s authors envisioned the $29 billion coming from “big companies” who made or imported the devices. More than one of the medical device manufacturers say that their operating profit margins are so thin, that they have no choice but to pass the cost on to consumers.
It appears that much of the $29 billion will be coming from the pockets of consumers.
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