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Kearns and Sons

Re: Obamacare and taxes

Obamacare may or may not still be the law in 2013, depending on how the Supreme Court rules. There are many myths about Obamacare. One untruth relates to taxes. John Valentine from Stevi does his darndest to perpetuate this common lie about a 2013 tax hike. As with any good lie there’s a kernel of truth to it, so listen closely.
Mr. Valentine and other naysayers proclaim that if you sell a home in 2013 Obamacare will charge you a 3.8% sales tax. Completely untrue. I’ve read the provision in the healthcare law and here’s the truth:
Currently we all pay a 2.9% Medicare tax on earned income, deducted from our paychecks. Because of Obamacare, starting in 2013, the Medicare tax will go from 2.9% to 3.8% on earned AND unearned income (like interest, dividends, capital gains) ONLY if you make more than $200,000/year (single) or $250,000/year (married). Importantly, there are numerous exemptions including retirement plan distributions and capital gains from the sale of a primary residence.
So there’s the truth. If you’re extremely wealthy your Medicare tax will go up less than 1% (0.9%) if you sell a vacation home. If you’re making Romney-ish passive income on interest and dividends you’ll pay a tad more. Or, if you simply make more than $200K in earned income you’ll likewise pay a smidgen more. For probably 98% of us there’ll be no tax hike, certainly not if you sell your principal home. There’s no “sales tax” like the fear mongers decry. The truth in Obamacare is much less glamorous and scary than what John Valentine would have you believe. Next time somebody tells you Obamacare will cost you a 3.8% sales tax on a home sale, tell them it’s a lie. Or if you’re patient and polite enough, calmly explain the truth.
Karen Savory
Hamilton

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