The 2.3% medical device tax imposed by the Affordable Care Act (ACA; P.L. 111-148) in 2010 was one of a number of additional revenue-raising provisions to finance health reform. This tax, which took effect in January 2013, is projected to collect approximately $38 billion of excise tax revenues over the next 10 years, resulting in $29 billion of net revenues, after accounting for offsets from other taxes. Some have called for a repeal of the medical device tax since enactment in 2010. Repeal of the tax has become such a high priority for some Members of Congress that it was one of the provisions discussed in the October 2013 negotiations over ending the federal government shutdown and increases in the federal debt ceiling. In the 114th Congress, the Protect Medical Innovation Act of 2015 (H.R. 160) would repeal the medical device tax retroactively to the first year of implementation in 2013. The major justification offered for the medical device tax is its revenue, which helps offset the cost of the ACA. Although the tax is relatively small, no revenue replacement has been proposed and it may be difficult to find. There is also a concern among some that eliminating the medical device tax would lead to proposals to eliminate similar fees and taxes on other industries, the sum of which, including the device tax, totals $165 billion over 10 years. The tax was justified partly because the medical device industry was among the commercial interests that stood to benefit from unanticipated profits as more individuals enroll in health care insurance, post-ACA. Viewed from the perspective of traditional economic and tax theory, however, the tax is challenging to justify. In general, tax policy is more efficient when differential excise taxes are not imposed. It is generally more efficient to raise revenue from a broad tax base. Therefore excise taxes are usually based on specific objectives such as discouraging undesirable activities (e.g., tobacco taxes) or funding closely related government spending (e.g., gasoline taxes to finance highway construction). These justifications do not apply, other than weakly, to the medical device case. The tax also imposes administrative and compliance costs that may be disproportionate to revenue. Opponents of the tax claim that the medical device tax could have significant, negative consequences for the U.S. medical device industry and on jobs. The estimates in this report suggest fairly minor effects, with output and employment in the industry falling by no more than two-tenths of 1%. This limited effect is due to the small tax rate, the exemption of approximately half of output, and the relatively insensitive demand for health services. The analysis suggests that most of the tax will fall on consumer prices, and not on profits of medical device companies. The effect on the price of health care, however, will most likely be negligible because of the small size of the tax and small share of health care spending attributable to medical devices.