Did the health care bill just crush my taxes?
3 Comments
Scotty, beam me up! I say this because after reading through the health care bill the taxes that are coming to pay for the plan will make you feel like you are in outer space.
If you are high wage earner or a small to medium size business owner that is doing well, now will be the time to begin thinking about your overall tax management plan as your future income taxes could end up skyrocketing to the tune of 60%! I don’t think people fully realize yet that some tax hikes are in this bill while others are already in motion, and I believe more to come within the next year.
First, the top tax rates are scheduled to revert to the 36% and 39.6% number where they were a few years ago from the 33% and 35% number that they are today. (source: www.irs.gov) If you are in the highest bracket that means you just took a 4.6% additional tax hike from a federal income tax level.
Second, this bill stipulates two increases in the Medicare tax. Number one, for single wage earners over $200,000 and married couples over $250,000, the Medicare tax is going to go up from 1.45% to 1.9% on your waged income. (source: www.bloomberg.com) Remember that on Medicare tax you generally pay half and your employer pays half so there is a hit on both sides. The bigger piece which the Government expects to raise $210 billion dollars from applying an additional straight 3.8% Medicare tax to all investment income which would include income earned from interest, dividends, capital gains, annuities, royalties, and rents. (source: www.bloomberg.com) This tax could have a huge impact on pre-retirees and retired individuals who are at a high level of income from those income sources. In addition, it truly makes decisions about when to take capital gains on your investments really important over the next 9 months if you are a high wage earner. Even though the hikes may not start until 2013, the decisions you make now will be enormous.
Third, the administration has proposed that capital gains tax moves outright from 15% to 20% beginning in 2011. (source: www.bloomberg.com) This means that the overall capital gains rates would be a minimum of 23.8% on high wage earners when all of these taxes are taken into effect.
Fourth, I don’t personally see how the social security tax of 6.2% (FICA) that is paid half by you and half by your employer doesn’t get passed at some point soon to be applied to all of your income for those who are single earning more than $200,000, and married couples earning over $250,000. This seems like a logical step considering that this is the first year where the outlays from social security exceed the intake from that specific tax.
Fifth, if nothing changes between now and the end of 2010, dividend taxation will be treated at your ordinary income tax level versus the 0% rate if you are in the 10% tax bracket, and 15% for all other tax brackets. (source: www.wikipedia.org) This is a big one for those who buy heavy dividend type investments or receive a lot of dividend income. It could cut that income down by another as much as another 24.6% based upon your income tax bracket.
Last, let me say that all of this doesn’t even involve what may happen in your local state with either state income tax or sales tax as they have to figure out how to pay for this bill as well. It should stand to reason for even the simplest of business proposals that if you spend 1 trillion dollars you have to be able to figure out a way to pay for it. These bills are so large and have so many line items in it that most normal people can’t really make heads or tails of it. If you make money or have money, don’t ignore this one because it will hit your wallet if you don’t put a plan in place today.
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This article is obviously written by a lobbyist for the insurance industry. You are totally transparent man.
If health care reform did not pass all of our taxes would go up just as much or more due to a broken health care system. Health insurance companies are gauging the american public and while some may want to dig their heads in the sand these abuses are literally killing our mothers, fathers, sisters, brothers in the name of profit.
This bill, while not the end-all-be-all actually will reduce the deficit. Don’t believe the hype people, this is a move to save all of our assess from corporate greed and excess that is running unchecked.
It amazes me all the backlash that came as a result of addressing this issue. Where was all the outrage after we learned we had spend 100′s of billions of dollars on a war started on false preposition?
David,
Unfortunately, I am the furthest thing from a lobbyist. Just a small business owner who literally put his personal assets and life on the line to build a business and create jobs for people. We have done just that since we opened our doors. However, I don’t feel that the very people who create the jobs should have to suffer tax wise for the hard work and risk they take to build a business.
If you read the article, I have no disagreement about health care reform. Just how we will pay for it. If the big companies are the issue, then let them bear the burden for the bill. Just not the very people who will create the jobs for the future of our country.
I appreciate your opinion, and reading Your Smart Money Moves.
Sincerely,
Ted
I am seriously not into politics…or is that even a fair word for what the Government should be calling itself these days…in any event…this ..if indeed it is true….is horrible.
Just how much can they bleed the people before there is nothing left?