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Ways and Means to Consider Device Tax Repeal

1 min readBy: Alan Cole

The House Ways And Means CommitteeThe Committee on Ways and Means, more commonly referred to as the House Ways and Means Committee, is one of 29 U.S. House of Representative committees and is the chief tax-writing committee in the U.S. The House Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue generation, as well as spending programs like Social Security, Medicare, and unemployment insurance, among others. will tomorrow consider a bill to repeal the Medical Device TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. levied by the Affordable Care Act. The tax, a 2.3% excise taxAn excise tax is a tax imposed on a specific good or activity. Excise taxes are commonly levied on cigarettes, alcoholic beverages, soda, gasoline, insurance premiums, amusement activities, and betting, and typically make up a relatively small and volatile portion of state and local and, to a lesser extent, federal tax collections. on sales of devices, has caused trouble for manufacturers and accounting firms due to its difficult base. As a result, it has not raised as much revenue as planned.

The most universal principle of sound tax policy is that taxes should have broad bases and low rates. The Medical Device Tax is essentially the opposite of that. It’s a narrow base, applying only to a particular industry. And even within that narrow base, there’s an unruly mess of deductions.

The point of the broad-base low-rates principle is that if everyone pays, taxes can actually fund some serious projects without being too burdensome. In contrast, if one relies only on a small set of unlucky taxpayers to shoulder a large burden, the weight is much more difficult to carry.

One of the great victories of this principle is that a lot of “special pleading” – lobbying for especially good tax treatment – has been denied over the last three decades. But especially bad tax treatment should be avoided, for much the same reason.

A single, unified system of taxation that treats all businesses equally is the ideal imagined by most voters and policy experts. Repeal of the Device Tax would bring us closer to that goal.