Battle of the Bilge

More Taxes from Health Care Reform?

The latest health care tax increase viral email to hit the web states that buried in the Health Care and Education Reconciliation Act of 2010 is a 3.8% real estate tax. While there is a 3.8% tax in section 1402 of the bill, it is not a tax on the overall sale of real estate (just profits) and there are several factors that are not mentioned that make it less likely to be a factor in average Americans’ future transactions than the email implies.

The Email

Under the new health care bill — did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don’t kick in until 2013 (presumably after Obama’s re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff makes (sic) your November and 2012 votes more important?

Oh, you weren’t aware this was in the Obamacare bill? Guess what, you aren’t alone. There are more than a few members of Congress that aren’t aware of it either (result of clandestine midnight voting for huge bills they’ve never read). AND, there are a few other surprises lurking.

More Information

There is a 3.8% tax on investment income for couples that earn over $250,000 and individuals that earn over $200,000 that was included in the Health Care and Education Reconciliation Act of 2010 – Section 1402, which is titled ‘Unearned Income Medicare Contribution’. A summary of this bill can be found here.

Here is the pertinent text:

Section 1402. Unearned Income Medicare Contribution

Medicare contributions are modified to include net investment income by imposing a 3.8 percent tax on interest, dividends, annuities, royalties, rents, gross income from a trade or business involving passive activities, and net gain from the disposition of property above a threshold amount. The threshold amount is $200,000 for an individual and $250,000 for a married couples filing jointly. This is effective for taxable years beginning after December 31, 2012.

The full language of the bill can be found here.

Please note that this only applies to profits and is not exclusive to real estate property. It was included in the Health Care Reform bill in the form of a Medicare tax as a way to have the money generated contribute to the Medicare trust fund to help its future solvency.

Beyond the income threshold requirements, there are already a host of tax exemptions that cover profits on real estate sales. In most cases, individuals are not taxed on the first $250,000 ($500,000 for couples) in sales profit. Again, that is profit, not sales price. A list of those exemptions can be found here. So the email quote of “If you sell your $400,000 home, there will be a $15,200 tax”, which derives that tax figure from 3.8% of the sales price is flat out wrong.

For this provision to affect anyone they would have to be relatively wealthy and have made a significant profit on their real estate sale. With the real estate market the way it is, it is unlikely that the vast majority of Americans will see any tax increase from this provision.

Congressional Analysis

Mark Keightley of the Congressional Research Service has produced a five page analysis of the tax for Congress that goes into the technical explanations and includes seven example scenarios. However, the examples assume no tax credits or deductions, so the end result may not be equal to personal experiences. Click here for the report: The 3 8 Medicare Contribution Tax on Unearned Income Including Real Estate Transactions

Discussion

Posts are not held for moderation so your comment will appear immediately, but may be modified if it violates our Community Standards.

From MOAA’s Legislative Update

A particularly cruel hoax has hit the email circuit regarding an increase in compensation for disabled veterans, as highlighted in this week’s Legislative Update:

VA Disability Hoax

An e-mail making its rounds on the internet claims that new legislation will dramatically increase veterans’ disability compensation – in some cases by more than 100 percent.

But that claim about H.R. 4667, the Veterans’ Compensation Cost-of-Living Act of 2010 is a hoax. The bill does exist, and it was recently passed by Congress, but it only authorizes the same COLA increase for VA beneficiaries that will be paid to Social Security annuitants this year (which almost certainly will be zero).

Unfortunately, a prankster created a fake version of the bill, put it out on the internet and it quickly turned viral. It just goes to reinforce the old adage: if it seems too good to be true, it probably is.

Additional Information

The various emails that are being passed around contain an attached .pdf document with a critical paragraph taken out and replaced with fraudulent text. You can read the entire bill here.

Here is how the determination of increase paragraph actual looks:


The email attachment replaces that language with the following:


The hoax copy also has an additional page:


Raising the hopes of disabled veterans is pretty much as low as you can go. And there are many things about this that will make it more effective than the usual email forward. First, the information is presented in the attachment that perfectly mirrors the actual bill with the exception of the skewed scanning. People that do the usual run through of verification would be able to confirm that the bill was passed in the House earlier this year and passed the Senate by the use of Unanimous Consent on September 22nd. Unless you dig into the language of the real bill and do a comparison, the hoax can be effective.

Discussion

Posts are not held for moderation so your comment will appear immediately, but may be modified if it violates our Community Standards.

Deadline Approaching

In October of 2009, Congress approved the payment of an additional $500 for servicemembers that have had their tours extended due to the Stop Loss policy. They later made DoD extend the payments retroactively to cover those affected starting after September 11, 2001. However, the payments can only be issued after an application is sent in and the deadline for the application is October 21, 2010. Which leaves just over a month for troops to act or they will lose the benefit. According to estimates, some 90,000 out of the 145,000 eligible personnel have not applied for their pay as of yet.

Congress put aside $534 million for the retroactive payments, but there have only been about $210 million in funds distributed from that allocation.

Eligibility

According to The Supplemental Appropriations Act, 2009, Public Law 111-32, Section 310, those eligible are:

…Service members, including members of the Reserve Components, former and retired members under the jurisdiction of the Secretary, who, at any time during the period beginning on September 11, 2001, and ending on September 30, 2009, served on active duty while the Service members’ enlistment or period of obligated service was involuntarily extended, or whose eligibility for retirement was suspended pursuant to any provision of law authorizing the President to extend any period of obligated service, or suspend eligibility for retirement, of a Service member in time of war or of national emergency…

Exclusions from eligibility include those discharged under ‘other than honorable conditions’ and Reserve Component members that were held under Stop Loss but were not actually on active duty.

How to Apply

Applications must be submitted by October 21st via DD2944 – Claim for Retroactive Stop Loss Payment. Details can be found here. Due to high volume, the form has at times been unavailable, so we have saved a copy for you to download. Click dd2944 for the .pdf form.

Discussion

Posts are not held for moderation so your comment will appear immediately, but may be modified if it violates our Community Standards.

Note of Apology

In response to the criticism in the comments I wish to extend my apologies for any partisanship that came through in my article. I attempted to address the facts and their presentation in the viral email and to point out that these new taxes are not realistically a given considering the (in)action that Congress would have to take for some of them to come into effect. This is something that is not stated in the email itself and supporting documentation is provided.

MOAA is apolitical by law and by nature, and this blog was created by the Member Service Center to address the many viral emails that we encounter daily. Instead of responding to each one individually, we started it to have a reference point to refer members to. It in no way takes time away from our legislative team’s actions nor does it affect our mission or goals, which are clearly laid out on MOAA’s Legislative Action Center. This is for informational and discussion purposes only and should not be seen as an extension of MOAA’s core principles and goals.

I can certainly understand the sentiment expressed, especially by Colonel James Rogers, that wishful thinking and predictions of Congressional action can be seen as partisan. It was not meant to be a support of any group, but an attempt to address specific items in the email.

Continue Reading »

Warning to Everyone, Really

From California’s San Bernardino County’s Department of Aging and Adult Services comes the following advisory:

Scammers, under the guise of being government officials, are contacting seniors either by phone, e-mail or in some cases in person and questioning if they have health insurance, according to a release. If the victim answers they do not, the con-artist threatens to put the senior in jail for not complying with alleged health care policies, officials said.

The scammers then offer the victim to sell them “ObamaCare” insurance to keep the elderly person out of jail.

According to government officials, there is no such policy, nor is there “ObamaCare” coverage.

Under the current national health care bill, the requirement to have health insurance doesn’t go into effect until 2014. And even then, those who do not have coverage cannot be jailed, county officials said. Instead, a gradual fine system will kick in.It’s unclear how many victims there may be in San Bernardino County or locally. Anyone who feels they may have been victimized is asked to call their local law enforcement station or call Adult Protective Services at (877) 565-2020.

Full story via VVDailyPress.com – http://www.vvdailypress.com/news/health-21359-scammers-officials.html



Weak. Preying on the elderly is disgusting. I’ve been seeing an uptick in the myth of people being jailed without any insurance, but not much in the way of coherent arguments against it. Let’s hope nobody falls for this crap again and they introduce a few people to the health care system they have in jail…

PS – I realize I used ObamaCare in the title after railing against it, but try to share this news without using the title of the scam. Still, verify.

Discussion

Posts are not held for moderation so your comment will appear immediately, but may be modified if it is deemed inappropriate.