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Hugh Hewitt Book Club

Easy repeal for medical device tax

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Harvard won an NCAA tourney game and the United States Senate voted 79-20 to repeal a tax — both on the same day last week. “Your old men shall dream dreams,” proclaimed the prophet Joel, “and your young men shall see visions.” Strange things are afoot.

There is nothing the House GOP can do about arranging for more basketball upsets, but there is plenty it ought to be doing to move quickly to extinguish the medical device tax, a 2.3 percent excise tax on every medical device — low or high-tech — sold in the country. In a fixed price market (and many medical devices are sold on such terms), this is a devastating levy. Even when the tax can be passed along, it deeply injures the growth of a vibrant and expanding industry in which the United States leads and should continue to lead.

On Monday’s radio show I will host at least two medical device entrepreneurs. Like almost all venture capitalists, they know the risks when they invest in start-ups, but the country needs to foster the environment in which their successful products thrive, not where they are penalized. The medical device tax was one of the very worst features of the very bad law known as Obamacare because it raises far less revenue than would be created by successful, thriving manufacturing companies in this sector, and it cripples innovations that can contribute to health.

Even most Senate Democrats know this. When you have lost Elizabeth Warren — and the new Massachusetts senator did vote to kill the tax — even the Left ought to know it has lost the argument.

So what will the House GOP do? The Senate’s vote is part of its budget process so it has no effect on the actual law. It is a test vote of sorts, but the sort of test vote that ought to cue Speaker Boehner and his team to find every possible vehicle to which to attach repeal.

House Budget Chairman Paul Ryan told me last week that the Continuing Resolution, which will fund the government, could not be used to repeal the tax, but even it could provide means of keeping the issue on the front burner. “Riders” to appropriations bills are an old and much used part of the spending process, and riders proclaiming that this or that agency shall not spend any money to do specific tasks have a venerable tradition among legislators sharpening their knives.

How about a rider that bars the IRS from expending any funds in the collection of the tax or the enforcement of the failure to pay it? How about a rider mandating a regulation which communicates a very, very narrow definition of what a “medical device” means? There are plenty of ways for a Congress full of resolve to work its will.

What may be lacking is urgency among the GOP members of the Ways and Means Committee, who want comprehensive reform and not piecemeal bits of legislation. Fine as to the general point, but wholly irrelevant to a situation where the bipartisan support is so overwhelming and the point that would be made by repeal is so powerful.

With the Senate vote fresh and the case for repeal so obvious, the House GOP has to find a way to see and raise the pretend vote in the upper chamber and do so now. Maybe the debt limit if the CR will not work, but something and soon.


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