The Rising Tide: New Health Care Taxes

We've been hammering this theme for months. Taxes are set to rise. It's a given. However, we weren't talking about taxes to pay for NEW programs but just paying for existing obligations. Then, in March, Congress passed the entirely new federal health care program. To help pay for the changes, the legislation contained two surprising new taxes: an extra 0.9% levy on wages for couples earning more than $250,000 ($200,000 for singles) and a new 3.8% tax on investment income on those same people (technically, people with "adjusted gross incomes" above those amounts).


As Laura Sanders of WSJOnline (www.wsjonline.com)writes:

Each tax signals a radical change in policy. For workers, the extra 0.9% levy puts a progressive element in what used to be a totally flat tax. The 3.8% tax on investment income also knocks down a longstanding wall by applying a "payroll" tax to unearned income. Until now, FICA taxes for Social Security and Medicare have applied only to wages, not investment income.

The article contains a question and answer of how the tax might work, given that the IRS hasn't had time to figure this out yet, and tax planning strategies for handling these new burdens, if you are affected. Well worth a read, the full story is here.