U.S. manufacturers of medical devices started 2016 with a windfall — a two-year suspension of a controversial tax on their revenue.
Medical devices include a wide range of products and machines used in medical care, such as tongue depressors, endoscopes and MRI scanners, for example. Manufacturers say the tax on devices hurt their business. The Congressional Research Service estimates companies paid out $2.4 billion in 2014.
“When this tax went into place it forced us to make cuts and sustain those cuts,” says George Montague, chief financial officer of Minnesota-based Smiths Medical. His firm takes in more than $1 billion a year for its specialty medical products.
Smiths Medical had paid $10 million a year in medical device taxes, Montague says, “and so now we’re getting that funding back.” He insists the money will go into building the business.