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Tax Reform

There is broad bipartisan agreement that comprehensive corporate tax reform is essential to improve America’s competitiveness and rebuild our nation’s economic future.

AdvaMed has developed a broad set of tax reform principles that, if adopted, will make a significant contribution in maintaining our nation’s world leadership in the medical technology industry. While these principles were designed by AdvaMed based on the needs of the medical technology industry, we also believe they are broadly applicable to all knowledge-based manufacturing industries. Our principles state that the goal of tax reform should be to support job creation, economic growth and competitiveness. To achieve these objectives, tax reform should:

  • Eliminate the $30 billion medical device tax.
  • Provide a level playing field for medical device companies competing in world markets.
  • Encourage retention and expansion of jobs in the U.S. by providing tax incentives comparable to or better than our major competitor nations.
  • Provide incentives for investment in research and development, which is key to the growth of the knowledge-based, high value-added industries on which America’s economic future depends.
  • Spur availability of capital for small and start-up companies that play a vital role in inventing and developing innovative breakthrough products.

Promoting Innovation in Emerging Companies

Approximately 62% of medical technology companies have fewer than 20 employees. These emerging and early-growth companies play a key role in sustaining the med tech industry and – since many are in the pre-revenue or early revenue stages – have unique needs when it comes to tax reform. AdvaMed believes that in order to promote innovation by these emerging companies, the following policies should also be part of tax reform:

  • Limit passive activity loss (PAL) rules to incentivize investors to finance companies at earlier stages of development;
  • Reform the use of net operating losses (NOLs) generated by R&D to encourage outside investment in smaller firms;
  • Change the qualified small business (QSB) definition to include companies with gross assets of up to $150 million (vs. $50 million); and

Coalition of Small Business Innovators logo

These recommendations are endorsed by the Coalition of Small Business Innovators, a national, non-partisan coalition of organizations dedicated to stimulating sustained, private investment in small companies focusing on the development of transformative, life-changing new technologies.

  • In addition, AdvaMed supports the permanent extension of the current depreciation expense deduction, which allows small businesses to deduct up to $500,000 of the cost of depreciating business assets.

For more detailed information about AdvaMed’s position on tax reform, please browse our resource center below: