Share This Article
On Obamacare, Taxes, and Urban Legends
"Urban legends" come up in many spheres of life, including politics. Unfortunately, several urban legends have cropped up recently in relation to the two-dozen new or higher taxes in Obamacare. Sometimes, these urban legends are attributed to Americans for Tax Reform. There's no need to make up new tax hikes--the dozens of them in Obamacare are quite enough. This posting is to set the record straight on two urban legends we've seen a lot:
"There's a new 3.8 percent Medicare surtax on home sales." This refers to a new, 3.8 percent surtax on investment slated to begin in 2013. This will be assessed on taxable capital gains, dividends, interest, etc. in households making more than $250,000 per year.
The reason this urban legend is misleading is because most home sales are excluded from capital gains taxation. If a married couple has owned and lived in their primary residence for at least 24 of the 60 months prior to sale, they can typically exclude up to $500,000 in capital gains from taxation.
Certainly some home sales will face this surtax, but it's not every home sold by any stretch. It will in fact be a small fraction of all homes sold.
"All workers will have to pay taxes on their employer-provided health insurance benefits." This springs from an Obamacare provision which requires employers in 2011 (recently moved to 2012) to report the value of employer-provided health care on employee W-2 forms.
There's no doubt that this is a setup for a future tax hike down the road. But it's inaccurate to call this a tax hike in and of itself. As it is, it's merely information reporting, and the JCT associated no higher tax revenues with it.