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Lamar Alexander aims to repeal part of Obama's health-care plan

3:32 PM, Mar 21, 2013   |    comments
Sen. Lamar Alexander, R-Tenn.
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By Lance Williams The Tennessean

U.S. Sen. Lamar Alexander is trying to eliminate the federal excise tax on medical device manufacturers, which was passed as part of federal health care reform.

Alexander, R-TN, sponsored an amendment today as part of the federal budget process that would repeal the 2.3 percent excise tax on medical devices, and replace that lost revenue by ending a federal subsidy for wind energy.

Specifically, Alexander's amendment would repeal the recently passed one-year, $12.1 billion tax credit that subsidizes the production of electricity through wind turbines.

"This amendment is about ending two damaging tax policies that are costing Americans billions of dollars, and costing Tennesseans good jobs," Alexander said. "It gets rid of a 20-year-old, multi-billion-dollar subsidy for unreliable, expensive wind energy that stands no chance of powering our nation's 21st century economy, and it repeals the Obamacare tax on life-saving medical devices."

The Congressional Joint Committee on Taxation estimated tax revenue from the excise tax at between $2.7 billion and $3.4 billion annually between 2014 and 2019. The excise tax was estimated at the time of passage to raise $20 billion total over the same period.

The excise tax could have an major impact in Tennessee, because medical devices are the state's largest overseas export, generating $2.1 billion in 2012. Exports in that category have grown by 15 percent in the last year alone.

A 2011 study by the Manhattan Institute estimated that the tax could cost more than 1,000 jobs in Tennessee, reducing total compensation of workers in that industry by $83 million. Overall, the industry employs about 9,200 workers in Tennessee, and total compensation in that industry stands at $747 million.

In February, for instance, Smith & Nephew, a medical device manufacturer with a large presence in Memphis, announced it would be laying off nearly 100 employees in Tennessee and Massachusetts as a direct result of the new tax on medical devices.

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