Pearson Group Real Estate


3.8% home sales tax in health-care law clause without merit for 99%
May 16, 2012, 12:00 am
Filed under: Uncategorized

By LONA O’CONNOR
Palm Beach Post Staff Writer
Posted: 11:34 p.m. Monday, May 14, 201

An email circulating on the Internet claims anyone who sells a house after 2012 will be hit with a new 3.8 percent sales tax, thanks to an obscure clause in the Patient Protection and Affordable Care Act.

A cause for concern?

The 3.8 percent tax is real, but it affects only people with high incomes who make large profits on the sales of their homes.

“It’s not a sales tax; it’s a tax on all income, which would include capital gains, and its purpose is to make Medicare solvent,” said Palm Beach accountant Richard Rampell. “It’s a tax on profit.”

The new Medicare tax greatly interests Rampell’s peers, who are devising strategies to soften the tax’s effect on their clients if the provision takes effect next year.

A decision is expected soon from the U.S. Supreme Court. The key point is whether it is constitutional for the act to require all Americans to buy health insurance.

In April 2010, when the Affordable Care Act was passed and the email started circulating, Snopes.com and FactCheck.org declared it false. PolitiFact.com gave it a “pants on fire” rating.

Yet it continues to ping-pong around the Internet.

The Affordable Care Act “is set to screw the retiring generation who often downsize their homes,” it claims.

For citizens with the determination to read the 974-page act, the tax is introduced on Page 965 in Chapter 2A, Section 1411: “Unearned Income Medicare Contribution.”

The provision, which is meant to help support Medicare, does impose a 3.8 percent tax, but only on individuals with incomes greater than $250,000, and only on those who make a profit of more than $250,000. And only the portion greater than $250,000 would be taxed.

West Palm Beach real estate broker Sherry Lee, who received the email, said some of her clients might have made that kind of profit on a house sale in the years before the real estate bubble burst, but very rarely now.

Still, Lee thinks it would be unfortunate if even a few couples nearing retirement had to pay the sales tax, just because they invested well or because they bought their house so long ago that their profit might exceed the $500,000 limit for a couple.

“Even if they made $600,000 and only got taxed on the $100,000, that’s $3,800 taken out of the economy,” Lee said. “My mother is near retirement. If that $3,800 was in her pocket, I think about what she could do with it.”

The email’s original source appears to be an April 2010 blog post on www.gop.gov, which describes itself as “the website of the Republican majority in Congress.”

The email also says, “The National Association of Realtors is working to get it repealed.”

The Realtors association did send a letter to then-House Speaker Nancy Pelosi and Democratic Rep. Sander Levin, then-chairman of the House Ways and Means Committee, saying that it opposes the 3.8 percent tax “in the strongest possible terms” and that the tax would “impair and delay” economic recovery.

But Stephanie Singer, the group’s director of communications, is not happy to see her organization mentioned in a chain email. To keep people informed, the Realtors have produced a video and an 11-page brochure explaining tax consequences.

To Jeanette Castillo, who studies social media, the email reflects the state of modern political discourse.

The accuracy of a politically motivated email is rarely the point, said Castillo, assistant professor in the College of Communication and Information at Florida State University.

“I found it on a conservative discussion forum and message number 3 said, ‘This has been debunked, it’s essentially a capital gains tax,’ ” Castillo said. “But there were still people coming in afterward, reacting as though it was true. There is a core of people that are going to embrace something like this because it reinforces their political narrative.”

In other words, people on all sides of a political debate read online information that reinforces, not challenges, their beliefs.

Maybe the Obama administration should generate a few viral emails of its own, Rampell said.

“They could have done a lot better job highlighting the benefits, like no exclusions for pre-existing conditions and coverage of children to (age 26),” Rampell said. “They could have sold it as ‘Medicare for all.’ ”

Castillo agrees that the administration ceded the political debate to its most passionate opponents.

“The ultimate narrative that came out of this bill was the tea party saying, ‘Government, keep your hands off our Medicare.’ I’ve been a diabetic since I was 14, so when I hear Republicans talk about health care savings accounts, I think, ‘Was I supposed to start saving for my lifelong chronic disease before I was 14?’ I talked to a woman, a poorly paid clerical worker, who told me that the free wellness visits for her three children have saved her life. They have done so little to promote things like that.”

Castillo, however, is an optimist.

“Social media is proving that people really can demand that something get on the agenda. They can force topics into the media,” Castillo said. “What fascinates me is that average people on the left and right care about their country. They want to live in a democracy.”

Castillo’s secret weapon is her mother, a librarian in Indiana.

“She gets a lot of those emails, very conservative, some of them racist. She told me the other day, ‘I’m not going to take this anymore.’ So now she hits ‘reply all’ and corrects their errors.”

Advertisements

Leave a Comment so far
Leave a comment



Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s



%d bloggers like this: