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How To Avoid The New Obamacare Tax
Posted by Brittany Stepniak – Thursday, July 5th, 2012
The votes are in and the Supreme Court has officially decided to pass the Obama Healthcare Reform Act. If you've logged onto any social media site, listened to any talk radio shows, or have been reading the opinion columns in newspapers, you know this action has come under a great deal of scrutiny from constituents across the nation.
Investors especially have been on edge, waiting to hear what the Supreme Court would mandate in regards to the proposed 3.8 percent surtax on investment income. Then, last Thursday, investors and tax advisers heard that the new tax would affect those investors with an adjusted gross income of more than $250,000 OR $200,000 for single tax-payers.
That's right, more taxes on the “wealthy.” We've kissed the traditional notion of the “flat tax” goodbye.
Under the new law, the tax rates on long-term capital gains and dividends for individuals that fall into that category will spike up from a historic low of 15% up to 18.8%. This will take place on January 1, 2013.
According to the Wall Street Journal:
If, on the other hand, Congress allows the tax rates set in 2001 and 2003 to expire on Dec. 31—an unlikely scenario, according to many experts—the top rate on capital gains will rise to 23.8% and the top rate on dividends will nearly triple, to 43.4%.
…
The new levy is complex, but in effect it is a flat tax on investment income above the $250,000/$200,000 threshold. Note that while the tax applies only to investment income above the threshold, other income—such as wages or Social Security—can raise adjusted gross income, making investment income more vulnerable to the tax.
