Election 2016: Mitt Isn’t Ready to Call It Quits
**Posted by Phineas
Remember when Nancy Pelosi said we had to pass the bill in order to find out what’s in it?
Beginning January 1, 2013, ObamaCare imposes a 3.8% Medicare tax on unearned income of “high-income” taxpayers which could apply to proceeds from the sale of single family homes, townhouses, co-ops, condominiums, and even rental income, depending on your individual circumstances and any capital gains tax exclusions. Importantly, the “high income” thresholds are not indexed for inflation so will reach increasing numbers of middle-class taxpayers over time.
In February 2010, 5.02 million homes were sold, according to the National Association of Realtors (NAR). On any given day, the sale of a house, townhome, condominium, co-op, or income from a rental property could slam middle-income families with a new tax they can’t afford.
Just what a stagnant housing market needs, right? More disincentives to buy and sell.
Meanwhile, that nest egg you’ve built up for retirement through property appreciation? Well, in addition to any other taxes you’d have to pay, starting in 2013 you’ll pay 3.8% more, because, blast it, you’ve made enough. Don’t you understand that it’s really government that creates wealth, and therefore government can take
what it needs whatever it wants, to redistribute howsoever it feels?
What is wrong with you, you kulak?
via Wayward Okie
UPDATE: The Heritage Foundation clarifies the conditions in this new tax.
There is not a new specific tax on all real estate transactions in the PPACA. But that’s not the end of the story. There is a surtax on real estate transactions that are already taxed under current law. Capital gains in excess of $500,000 from the sale of primary residences already face the capital gains tax. The new tax in the PPACA will raise the rate on these gains.
The Tax Foundation clears the air by explaining how the new tax will work:
“The bill would impose essentially a capital gains taxes on some home sales made by a limited number of taxpayers. (The health care law contains a new 3.8 percent tax on “unearned income” for high-income taxpayers. Unearned income includes capital gains.) To be hit by the 3.8 percent capital gains tax, you first have to be a married couple making more than $250,000 in adjusted gross income or $200,000 if you are single. The capital gain on the home sale must also exceed $500,000 if this is a primary home and you are a married couple ($250,000 for singles).”
Here’s an example of how the tax would work: Say a couple makes $260,000. They purchase a primary residence at $400,000 and sell it for $1,000,000. This would amount to a capital gain from the sale of their home of $600,000. Capital gains tax plus the new Medicare tax would apply to profits over and above the threshold of $500,000. In this case, the couple’s capital gain of $600,000 exceeds the threshold by $100,000. The couple would pay the capital gains tax, which rises to 20 percent in 2011 under President Obama’s tax hike plan, plus the new 3.8 percent tax for a total tax rate of 23.8 percent on that $100,000. Their tax bill in this scenario is $23,800. The PPACA adds $3,800 to the couple’s final tally in this example.
The new Medicare investment tax provides a disincentive* for business expansion. The National Federation of Independent Business (NFIB) reports, “The $250,000/$500,000 thresholds only apply to the sale of a primary residence, so the tax will hit other property sales harder.”
*I think they meant, “another disincentive, among so many.”
Again via Wayward Okie.
It’s still a rotten idea.
(Crossposted at Public Secrets)