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Biz Group Says Fed Tax Bill Could Boost Mass Jobs

Dec 16, 2015Council in the News, State House News Service

By Michael P. Norton

Mark Gallagher, spokesman for the Massachusetts High Technology Council, told the News Service Wednesday that the suspension of the medical device tax, which stems from the Affordable Care Act, “reflects a growing bipartisan appreciation for the negative impacts the tax will have on research and innovation, impacts that will have particularly severe consequences for some of Massachusetts’ most innovative companies and largest employers.”

“We urge members of the Mass. Congressional delegation in particular to support and advocate for the suspension and, ultimately, a complete repeal of the tax,” Gallagher said.

Small business and medical device industry officials say a pair of provisions in the just-struck Congressional deals on tax credits and spending bode well for job production in Massachusetts.

According to the National Federation of Independent Business (NFIB), the deal makes permanent a section of the IRS tax code authorizing businesses to expense up to $500,000 of new investment in heavy machinery, office equipment, computer technology and other big-ticket items.

NFIB says that when the Bush tax cuts expired, the amount that small firms could expense dropped to $25,000 and the provision was allowed to expire every year unless Congress extended it. The uncertainty made it “difficult or impossible” for small businesses to make investments with confidence that the tax credit would be available, according to Massachusetts NFIB Director Bill Vernon.

“Our small business owners are struggling to find the optimism that was once characteristic of entrepreneurs. But today may be the first time in who knows how long that Congress is taking a step that will encourage new investments and create more jobs,” Vernon said in a statement on Wednesday. “Small businesses have been holding off on hiring additional people, expanding their businesses and investing more capital for years; this victory on Capitol Hill will be the acknowledgement they have been looking for from lawmakers that their concerns are in fact being heard.”

Medical device industry officials are applauding the deal’s two-year suspension – 2016 and 2017 – of the federal medical device excise tax, which was implemented in 2013 and has had a “devastating impact” on the industry locally, according to Massachusetts Medical Device Industry Council President Tom Sommer.

A January 2015 study of the impact of the tax by the Advanced Medical Technology Association estimated the levy would result in 39,000 fewer industry jobs, including jobs actually lost and jobs not created. The tax led to a reduction of 14,000 jobs in 2013, the report said.

“A two-year suspension of the tax would allow medtech companies to address these issues and make the investments needed to accelerate patient and provider access to innovative health care products,” Sommer said in a statement Wednesday, urging members of the Massachusetts Congressional delegation to support the suspension of the tax during a vote expected sometime this week.

Sommer said a survey of the impact of the tax conducted by his council showed that medical technology manufacturers in Massachusetts and the surrounding region have been reducing spending on research and development, delaying expansion plans and seeking less costly, off-shore locations for manufacturing. “While MassMEDIC continues to support full repeal of the MDET, the suspension of the tax is an important and significant step forward in that effort,” he said.

The Hill reported Wednesday that House Democratic leader Rep. Steny Hoyer of Maryland is urging Democrats to vote against the so-called tax extenders bill, but acknowledged some Democrats might vote for it because of popular tax breaks.

“Obviously, it’s difficult for members to vote against good stuff,” Hoyer said, according to The Hill. “But, of course, it totally takes the discipline out of the system, because it’s another thing you don’t have to pay for – the goodies. The candy comes and the spinach is never paid for.”

Democratic Leader Rep. Nancy Pelosi of California says House Democrats have “a number of concerns” with the spending bill, and in a statement expressed strong opposition to the tax extenders bill.

“Republicans’ tax extender bill provides hundreds of billions of dollars in special interest tax breaks that are permanent and unpaid for,” Pelosi said. “These massive giveaways to the special interests and big corporations are deeply destructive to our future. We have a responsibility to pass legislation that grows the paychecks of hard-working families and invests in the future of our children. The tax extender bill fails to meet that test.”

Mark Gallagher, spokesman for the Massachusetts High Technology Council, told the News Service Wednesday that the suspension of the medical device tax, which stems from the Affordable Care Act, “reflects a growing bipartisan appreciation for the negative impacts the tax will have on research and innovation, impacts that will have particularly severe consequences for some of Massachusetts’ most innovative companies and largest employers.”

“We urge members of the Mass. Congressional delegation in particular to support and advocate for the suspension and, ultimately, a complete repeal of the tax,” Gallagher said.

The deal could also have implications for the growth of the wind energy industry in Massachusetts, where policymakers appear poised to encourage more renewable energy in part to offset the planned shutdown of Pilgrim Nuclear Station in Plymouth.

According to the American Wind Energy Association, the agreement provides “multi-year predictability as we have called for.” Tom Kiernan, CEO of the American Wind Energy Association, said in a statement, “The later years of this agreement will provide some challenges that the wind industry will work to overcome with our employees, partners and champions … If this passes, our industry will get a break from the repeated boom-bust cycles that we’ve had to weather for two decades of uncertain tax policies. This plan will drive more development, and near-term prospects look strong – especially as utilities, major end-use customers, and municipalities seek more low cost emissions-free renewable energy.”

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Increasingly, the Massachusetts High Technology Council is stepping up to create, execute, and lead critical statewide competitiveness strategies. Fostering a vision for our innovation economy under the MassVision2050 banner, the Council solidifies its position as a thought leader providing valuable insights to navigate emerging technologies, facilitates long-term planning, and reinforces the Council's commitment to excellence and action in the evolving Massachusetts tech-driven economy.

To learn more, contact Council President Chris Anderson.