House Democrats are funding their new
entitlement with a 5.4% surtax on incomes above $500,000
for individuals and above $1 million for joint filers.
The surcharge is intended to snag the greatest number
of taxpayers to raise some $460.5 billion, and so the
House has written it to apply to modified adjusted gross
income. That means it includes both capital gains and
dividends.
That surtax takes effect on January
1, 2011, or the day the Bush tax rates of 2001 and 2003
expire. Today's capital gains tax rate of 15% would
bounce back to 20% because of the Bush repeal and then
to 25.4% with the surtax. That's a 69% increase, overnight.
...
Some readers may think that this 5.4%
surtax can't possibly make it into a final Congressional
bill due to Senate opposition, but we wouldn't be so
sure. Mr. Obama hasn't said so much as a discouraging
word about the House bill. And we've seen in the past
10 months that when Mr. Obama's campaign promises clash
with the priorities of House liberals, the liberals
always win.
White House Budget Director Peter Orszag
said a proposal to apply Medicare taxes to capital gains
earned by wealthy Americans as part of health-overhaul
legislation isin play in order to scale back a proposed
levy on high-end insurance plans. ... Aides to Senate
Majority Leader Harry Reid have sought input on the
idea ....
Reid's proposal, being advanced by Senator
John Kerry, a Massachusetts Democrat, would apply Medicare
taxes to non-wage income earned from capital gains,
dividends, interest, royalties and partnerships for
U.S. couples earning more than $250,000, the aides said.
He’s also considering an alternative that would
simply increase the 1.45 percent Medicare tax on salaries
of couples who earn more than $250,000, one of the aides
said.
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