Fiscal cliff deal = most progressive tax code since 1980 = propaganda.

[HiPointDem]

10. medicare tax is a surcharge on *most* capital income over a cap, not just on S-T cap gains.

its own tax, a one off, & it was put in place *before* the fiscal cliff deal (in 2010, to go into effect in 2013).

sorry, you can't add it to every capital gains tax and claim that that's the new rate. it's not the new rate. the new rate for short-term cap gains is the same as the income tax top rate.

The medicare tax is a surcharge on ALL UNEARNED INCOME ABOVE A CAP (which I presume is now $400K rather than $200K, though that isn't immediately clear).

That is, if you had $100K of short-term cap gains, $200K of long-term cap gains, & $99K of stock dividends, you'd only be charged the 3.8% on income above the cap -- in this case, nothing.


It's not a tax on short-term capital gains. It's a tax on the sum total of capital income over a certain threshhold.

Your attempt to paint it as such is simply FALSE.

Where is the 3.8% tax found and when will it take effect?

Section 1402 of the Health Care and Reconciliation Act of 2010, which amends the Patient Protections and Affordable Care Act, outlines the new unearned income Medicare tax, and goes into effect January 1, 2013.

Who is subject to this tax?

Taxpayers with incomes or an adjustable gross income (AGI) over $200,000 who file individually or $250,000 for married couples filing jointly could be subject to this tax. The provision imposes a 3.8 percent tax (identical to the combined employer/employee tax rates on earned income) on income from interest, dividends, annuities, royalties and rents which are not derived in the ordinary course of trade or business, excluding active S corporation or partnership income.

Gross income does not include items, such as interest on tax-exempt bonds, veterans’ benefits, which are excluded from gross income under the income tax. If capital gains on a primary home sale exceed $250,000 for individuals or $500,000 for a married couple, and the income threshold is met, the excess realized gain is subject to the 3.8% tax.

How does this relate to the sale of a home?

There is no sales tax on home sales in the Reconciliation Act; instead, there is a tax which includes capital gains, rents, dividends and interest income that will only apply to taxpayers under limited conditions.

When determining if an individual or a couple is subject to the 3.8% tax:

A home sale MAY result in a capital gain that increases net investment income A home sale MAY result in a capital gain that increases a taxpayer’s AGI.

http://health.burgess.house.gov/uploadedfiles/one_page_on_unearned_medicare_tax.pdf