The IRS came up with 159 new rules on Friday which will take effect beginning on January 1st. The new rules cover the first surtax on investment income (capital gains and dividend income). It is a whopping 3.8% on the amount over $200,000 for individuals and $250,000 for couples. It is meant to help pay for Obamacare.
There is also a 0.9 percent healthcare tax on wages for this income group.
With or without the Bush tax cuts, high income earners stand to get killed in taxes starting with these two taxes.
It will never be enough. Certainly this won’t begin to pay for Obamacare and the threshold will be lowered until everyone who pays federal taxes will be affected, not just high income earners.
Evidence that I am correct lies in the Alternative Minimum Tax. The AMT targeted the very wealthiest of people back in 1969, the Johnson era. It was never adjusted for inflation and now more than 30 million Americans are hit by the tax.
The AMT has undergone numerous changes with the last one in 1994, the Clinton era, when it was raised to 26 percent for people who earned between $100,000 and $175,000, and 28 percent for those who earned above $175,000.
The Obamacare surcharge on investments will eventually hurt everyone. It is only a matter of time.
Read about the rules at Reuters