S.Amdt. 431

SA 431. Mr. LANKFORD submitted an amendment intended to be proposed
to amendment SA 267 proposed by Mr. McConnell to the bill H.R. 1628, to
provide for reconciliation pursuant to title II of the concurrent
resolution on the budget for fiscal year 2017; which was ordered to lie
on the table; as follows:

At the appropriate place, insert the following:

SEC. ___. FINDINGS; SENSE OF THE SENATE.

(a) Findings.--The Senate finds that--
(1) Since January 1, 2013, medical device manufacturers
have struggled under a 2.3 percent tax imposed by Obamacare
on the sale of certain medical devices. The misguided purpose
of that tax was to operate like an excise tax by raising
revenue at the point of sale to offset the cost of
Obamacare's insurance and Medicaid expansions by taxing
companies who help patients get access to life-saving medical
technologies.
(2) The tax was in effect from 2010 through 2015, but the
Consolidated Appropriations Act, 2016 (Public Law 114-113)
temporarily suspended the tax for 2016 and 2017. The tax is
now set to resume in 2018.
(3) Initially expected to produce $3,200,000,000,
supporters of the device tax argue that it would be similar
to the windfall profits tax from the 1980s, and recapture the
excess gains that medical device manufacturers are expected
to receive from the Patient Protection and Affordable Care
Act.
(4) Taxable medical devices are defined by law as any
device ``intended for use in the diagnosis of disease or
other conditions, or in the cure, mitigation, treatment, or
prevention of disease in man or other animals . . . or
intended to affect the structure or function of the body of
man.'' Based on this definition, the tax would be levied on
critical devices such as pacemakers and defibrillators.
(5) Since its enactment, the medical device tax has been a
major drag on medical innovation and contributed to the loss
or deferred creation of jobs, reduced research and
development, and slowed capital expansion. What is even more
troubling is that this tax was imposed without any real
policy justification, as the tax is not grounded in any
health care policy. As it stands under current law, it is not
connected to individual insurance coverage under Obamacare -
it was designed purely as a means of raising revenue from the
industry to offset the budgetary impact of the Patient
Protection and Affordable Care Act.
(6) At its most basic level, this tax violates commonly
accepted principles of sound tax policy. In a 2015 report,
the Congressional Research Service paid close attention to
excise taxes in particular, stating that, ``Viewed from the
perspective of traditional economic and tax theory. . .the
tax is challenging to justify. In general, tax policy is
considered more efficient when differential excise taxes are
not imposed. It is generally more efficient to raise revenue
from a broad tax base.''.
(7) The effects of the tax are felt across the industry, as
every dollar of revenue (not income or profit) earned by a
company is generally subject to the tax. For larger,
established companies, the device tax represents millions in
financial capital that could be used to expand research and
create jobs. For smaller, start-up firms, the effect is much
worse - not only does it deter company growth, since the tax
is imposed on the first dollar of revenue earned, but it also
restricts the ability of established medical technology
companies to invest in or acquire start-up companies by
limiting the amount of available capital for growth.
(8) Individual companies are already making important
planning decisions for the next fiscal year. Companies are
already making significant commitments of time and resources
to enable or restart their systems to accurately capture,
report, and pay the tax if it goes back into effect at the
end of the year. The longer Congress waits to act, the more
capital device companies will waste that could go towards
major medical breakthroughs to help patients, and more
broadly towards advancing the state of our nation's medical
technology.
(9) Permanently repealing the device tax will provide
medical technology innovators with the long-term certainty
necessary to support future job growth and sustainable,
research and development that will ultimately lead to the
next generation of breakthroughs in patient care and
treatment. With any other policy outcome, effective planning
for a sustainable future becomes much more difficult.
(b) Sense of the Senate.--It is the sense of the Senate
that the committee of jurisdiction in the Senate should
conduct a full review and assessment of the economic impact
of the medical device tax since its inception under the
Patient Protection and Affordable Care Act. Such review and
assessment should include consideration of the impact of the
tax on job creation, capital formation, research and
development, and medical technology innovation.
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