Daily Local News, Opinion, October 08, 2010
The health care reform now going into effect is complex enough without our elected representatives adding to the confusion.
There are several errors in the article “Obamacare Could Raises Taxes on Some Home Sales” on the Web site of Rep. Joe Pitts (R-16th):
“A new 3.8 percent Medicare tax on ‘unearned income’ could increase the taxes paid when selling a home. The tax is assessed on any capital gains for individuals with more than $250,000 in annual income. While supporters [of] Obamacare classified such individuals as rich, sale of even a moderately sized home could push many middle-income Americans into this category. The new tax is expected to raise $210 billion and could go into effect in 2013.”
What is wrong here?
1) The phrase “any capital gains” is wrong, because “The following types of income will not be subject to this additional Medicare tax: tax-exempt municipal bond interest, nontaxable veterans’ benefits, capital gains excluded from the sale of a principal residence, and distributions from IRAs, 403(b) plans, 401(k) plans, 457 plans, pensions, profit-sharing plans, stock bonus plans, or qualified annuity plans” (taxes.about.com — search 3.8 percent).
2) The phrase “$250,000 in annual income” is wrong, because the tax affects modified adjusted gross incomes over $250,000 for joint returns and $200,000 for individual returns; that’s after some deductions which can make a big difference.
3) For sale of a primary residence, the tax affects only net gain of over $250,000 for individuals or $500,000 for married couples.
4) Therefore, the phrases “moderately sized home” and “middle-income Americans” are also misleading.
The full story is laid out at factcheck.org (search 3.8 percent), according to which only about the top 2 percent of taxpayers would be affected by the change. “Middle-income”? I don’t think so!
It seems that “urban legend” e-mails are flying around on this subject; see urbanlegends.about.com and snopes.com (search 3.8 percent).
Although Mr. Pitts voted against the March 2010 Health Care and Education Reconciliation Act of 2010, at least by now he ought to know what’s in it.
There are a lot of factors to take into account, including benefits for many Americans such as those with pre-existing conditions, those who might be reaching insurance companies’ annual and lifetime spending caps, and those 25 and under.
What we need is rational public discourse, not perpetuation of alarming “urban legends” by incumbent politicians who are in close re-election campaigns.