Root For The Supremes
Lest ye be stuck with a gaggle of new taxes which hit the books next New Years Day.
Those would be the new Medicare taxes on both earned and investment income, occasioned by Obama’s health care “reform” law – unless the Supreme Court strikes the mess down, that is.
Remember that effective for tax years beginning after December 31, 2012, an additional 0.9% “hospital insurance” tax will tag wages in excess of $250,000 for married folk who file jointly. Not to mention that higher income taxpayers will also get clipped for a new 3.8% “unearned income Medicare contributions tax” on their investment income! And this latter new exaction will be a nasty one, hitting:
- Gross income (less applicable deductions) from interest, dividends, annuities, royalties and rents;
- Income from a trade or business to which the tax applies (such as a trade or business which may be classified as a “passive activity;” and
- Net gains attributable to the disposition of property (such as your house, your investment assets, and other “capital gains.”
Thank goodness for small blessings – retirement plan distributions (including
distributions from your IRAs) aren’t included (yet!) in the definition of investment income.
And if all of this isn’t enough to just make you want to throw up, consider the results of a recent study by the Tax Foundation, which indicates that in 2012, Americans will pay something over $4 trillion in taxes, which is $152 billion, or 3.9% more than they will spend on housing, food, and clothing combined!
“Transfer payments, or government social benefits, have grown to represent a substantial portion of money spent on living expenses, encompassing housing, food, clothing, healthcare and transportation” quoth Tax Foundation Adjunct Scholar Kevin Duncan recently. “This means the government is picking up an increasing portion of the tab for these essential goods.”
But not to worry – California rides to the rescue on all of this bad tax news. We hear that Assembly Bill 2540, which would have added a sales tax on services, has been stalled in favor of the notion that the Legislative Analysis Office perform a study on the matter. Hooray! We can hardly wait for the results of this latest in the seemingly endless parade of tax issue “studies” when it emerges in mid 2013 – just as we’re writing the checks to pay the new Medicare taxes…..
CONSULT YOUR TAX ADVISOR – This article contains general information about various tax matters. You should consult your CPA regarding the implications to your own particular situation.
Jeff Quinn, the author of this article, is a shareholder in Ashley Quinn, CPAs and Consultants, with offices in Incline Village and Reno. He can be reached at 831-7288, welcomes comments at firstname.lastname@example.org, and invites readers to consider his other commentary at http://blog.nolo.com/taxes.