Bloomberg News

Republicans Press Medical-Device Tax Repeal in U.S. Senate Fight

May 13, 2014

Republicans are trying to include the repeal of an excise tax on medical devices in a package of tax breaks moving through the U.S. Senate this week.

If their maneuver succeeds, Republicans could make a dent in the 2010 health care law they oppose and satisfy companies such as Medtronic Inc. (MDT:US) and Boston Scientific (BSX:US) Corp. that want the excise tax repealed. A non-binding vote last year to end the tax was backed by 79 senators.

“So many senators have said that they were in favor of repealing it” in a non-binding resolution, said Senate Republican Leader Mitch McConnell of Kentucky. “Why not have that vote when it really counts?”

Democrats, who are split on whether to repeal the excise tax, control the Senate floor calendar and haven’t decided whether they will allow a vote.

“I’m not sure this is the right time or the right vehicle,” said Senator Bob Casey, a Pennsylvania Democrat who supports rescinding the tax.

Senate Majority Leader Harry Reid, a Nevada Democrat, didn’t explicitly rule out a vote on the device tax.

“I’m not going to cry any big tears over the device folks,” he said. “Their profits were huge last year.”

The broader tax bill being debated would revive more than 50 tax breaks that lapsed at the end of 2013 and extend them through 2015. They include the research and development tax credit and a provision that lets individuals exclude debt forgiven if they sell their home for less than they owe on the mortgage.

Procedural Hurdle

The measure scaled its first procedural hurdle today in a 96-3 vote. Senators must cast several more votes before they can pass the bill, which would add $84.1 billion to the U.S. budget deficit over the next decade, according to the Congressional Budget Office.

The legislation includes provisions backed by most Democrats and opposed by some Republicans, including the production tax credit for wind energy.

It also contains policies that have the reverse partisan split, such as letting companies such as Citigroup Inc. continue deferring U.S. taxes on overseas financing operations.

“It’s a very difficult vote because there are some good things in it, and there are some horrendous things in it,” said Senator Bernard Sanders, a Vermont independent who aligns with Democrats.

Some votes before final passage will require support from at least 60 lawmakers, which means at least five Senate Republicans would need to join with Democrats.

Republicans’ Complaints

Republicans’ complaints about the way Democrats are running the Senate could trump their support for the tax policies. McConnell today wouldn’t say whether he would encourage Republicans to vote against the bill if they aren’t allowed to amend it.

Senator John Cornyn, a Texas Republican, said he hadn’t decided whether he would support the measure if Republicans can’t offer amendments.

“There’s a lot of good policy in there and there’s some bad policy in it,” he said.

If the Senate passes the bill, lawmakers would have to reconcile it with a very different approach in the Republican-led House of Representatives. There, lawmakers are picking individual lapsed breaks and extending them permanently, starting last week with the research tax credit.

The bill is HR 3474.

To contact the reporters on this story: Richard Rubin in Washington at rrubin12@bloomberg.net; Kathleen Hunter in Washington at khunter9@bloomberg.net

To contact the editors responsible for this story: Jodi Schneider at jschneider50@bloomberg.net Laurie Asseo


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Companies Mentioned

  • MDT
    (Medtronic Inc)
    • $63.37 USD
    • 0.66
    • 1.04%
  • BSX
    (Boston Scientific Corp)
    • $13.02 USD
    • 0.17
    • 1.31%
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