Skip to comments.Huge (53%) Tax Increase On SAVERS
Posted on 03/17/2010 9:11:29 AM PDT by Attention Surplus Disorder
If you were wondering where the hidden taxes are in "Health Reform", guess what - President Obama has just given you something to sit on.
The forced march to pass ObamaCare continues, and all that matters now is raw politics. But opponents should go down swinging, and that means exposing such policy debacles as President Obama's 11th-hour decision to apply the 2.9% Medicare payroll tax to "unearned income."
That's what savings and investment income are called in Washington, and this destructive tax wasn't in either the House or Senate bills, though it may now become law with almost no scrutiny.
This is unbelievably destructive to capital formation.
For the person who is "short-term trading" (e.g. daytrading, etc) this is a relatively small tax, an increase of about 7% in the tax (2.9% applied to the 39.6% maximum rate on "ordinary income", which short-term capital gains are.)
But for the person who is INVESTING for the long haul, that is, who is holding stocks for more than one year, this takes the marginal rate from 15% to 17.9%, an increase of almost 20% in the tax owed.
This, of course, comes on the back of President Obama's fraudulently engineered "rally", which was created through Congressional intervention to permit - surprise surprise - legalized accounting fraud through "mark to model."
So you got your stock market rally, and now President Obama and The Democrats are going to cram a 20% tax increase down your throat if you profited from it - and at this point, being 2010, there's not a thing you can do about it.
It gets better. Since ordinary investors can only write off $3,000 in capital losses, when you lose you don't get a tax credit. Oh yeah, you get to carry forward the loss to future years, but you paid the tax on the gains already - this is a putative future credit back.
Oh, and let's not forget that there was already a huge tax increase coming this year - the long term capital gains rate goes to 20% at the end of this year anyway as the Bush tax cuts expire.
So in fact the rate goes from 15% to 22.9%, a fifty-three percent increase in the tax rate.
And oh, if your AGI goes over $200,000 by even a dollar you are subject to this tax from the first dollar of your investment income.
A fifty-three percent increase in taxes on long-term (that is, capital-forming, long-term investment) capital gains - exactly the sort of investment activity you want to form businesses and invest for the long haul in America's future, not to mention generating jobs by forming those enterprises.
That's slammed the door on any interest I might have in forming a new business as I did in the 1990s - ever - and I suspect I'm not alone.
When this goes into effect my capital, other than that which I can shelter from taxation, is no longer going to be put at risk in the markets. I'd rather live in a nice little cottage on the beach and simply expend what I have rather than contributing to capital formation in any way, shape or form under a punitive system like this.
Because if Congress demonstrates that it will put 53% on the capital gains rate once I've already committed my capital (thereby destroying my return) I will not take the risk of them doing it again and making the rate even more punitive.
Call me Pollyanna, but I’m still hopeful that even if this monstrosity passes, we will be able to undo it.
We just need to make sure it doesn’t pass!!!!!!!!!
pretty soon companys will probably have to send our checks to washington and then washington will dole out to us what they want after they take theirs....
Democrats die if they don’t increase taxes.
We need enough of a margin in November to thwart the maoist’s plans for the USSC, the tax code, and of course, undo the health care taxes.
This was rumored before the election, but I thought we’d have some warning, not have it snuck thru in the HC bill!!!
I’m hoping IF it passes it gets tied up in the courts forever. AND I’m expecting the states to stand up and say “oh no we won’t” and mean it.
Entitlements, once given, are to the Democrats favor.
We are seeing the death of Conservatism.
You mean we won’t be able to act like democRATS an just use a simple majority? :-)
Obama will bring back the days of saving money.
In your mattress.
Obama lied! He said he wouldn’t raise taxes on those earning less than $250,000, yet, here is another example of his taxing those people.
“Obama will bring back the days of saving money.
In your mattress.”
You make a serious point actually. His taxing, taxing, and taxing is going to force people to keep their money privately when this economy needs the cash influx from private holdings. This is going to significantly hurt the economy even further.
I think dems view investing as something only done by the rich. His promise of no raising taxes for those earning less than $250K is probably just for base w-2 income. I really think they believe if you have the capacity to invest, you have the capacity to pay taxes on those returns.
That is exactly what I told hubby. If this passes then I will only allow enough to go into the savings to cover the housepayment and keep the checking under a certain amount and only add to it when we need to pay insurance or taxes.I plan to add an in the floor firesafe here in the house to hold everything else.Thgey are not going to take our money anytime they want!
I find this sentence hard to believe, and if true, even harder to swallow. This is a marginal tax rate of many thousands of percent on that additional dollar! I thought that taxes were supposed to increase "smoothly" as you went up the schedule. This would be unprecedented if true.
I think that falls in line with the evil bastard’s plan. There’s nothing wrong with ObaMarx that a terminal disease won’t cure.
What??? Obama lied??? I’m shocked!
You can tell Obama is lying by the way his lips move.
Investment is a critical component of capitalism. If we don’t reward investors, the system is crippled. Not only does O-a$$hole not want to reward investors, he wants to punish them. If we don’t stop this EVIL IDIOT, we’re doomed.
Yep, capitalism thrives when produced capital is used to produce more capital. It suffers at the hands of little kids who think our money is burning a hole in their pocket.
Get your money out of the banks, ira’s, 401k, etc.
pay the tax and penalty, then starve the beast!
I plan on keeping it in overseas accounts and then moving there. Then I’ll live well while the US goes about it’s dance with death.
I think he’s going to go after the upper (Conservative) 1% and then go after the middle class.
Add to this the “tax” on savings imposed by the soon to be double digit inflation. To have any savings, buy gold and bury it in the back yard until after Obama is deposed.
After reading this I think I’m glad I had to cash out my retirement plan. If I would have done so 6 months earlier I would have had almost twice as much. But better some than none!
Defeat Obamacare call list: List now contains the new MAYBES culled from FR posts. Be sure to call KNOWN RINOS too.THEY ARE ANSWERING THEIR LOCAL NUMBERS
Here is one of the ones Rush gave out on the radio that Im calling. So far its been busy but Im going to burn it up till I get to tell my congress critter to vote NO!
Join me?..... 1-877-762-8762
KEEP THE CALLS UP! DC OFFICE LOCAL OFFICE
Code Red - House Target List on Health Care
The National Republican Congressional Committee has published a target list on health care. In addition to continuing to contact the five Tennessee Democrat Congressmen, you can go http://www.votervoice.net/link/clickthrough/ext/94697.aspx to contact some of these targets. Much of the talk following Obamas announcement has focused on how to defeat this second bill through reconciliation, but that is misleading because the first step to defeating Obamacare is not by concentrating on defeating the fixer bill but by defeating the Senate bill in the House when it goes to the floor for an up-or-down vote on Thursday, March 18th.
Dennis Kucinish, Lakewood 216)228-8850, Fax (216)228-6465,
Parma. 440)845-2707, Fax (440)845-2743, DC (202)225-5871
James Oberstar (202) 225-6211, Duluth (218) 727-7474, Chisholm (218) 254-5761, Brainerd (218) 828-4400, North Branch, (651) 277-1234
Rep. Lincoln Davis 202-225-6831 Columbia office: 931-490-8699
Rep. Jim Cooper 202-225-4311 Nashville office: 615-736-5295
Rep. Bart Gordon 202-225-4231 Murfreesboro office: 615-896-1986
John Tanner (202) 225-4714, Union City, (731) 885-7070, Jackson Phone: (731) 423-4848, Millington (901) 873-5690 TN (MAYBE)
Rep. Steve Cohen 202-225-3265 Memphis office: 901-544-4131
Harry Mitchell (202) 225-2190 (480) 946-2411 AZ 5th District
Gabrielle Giffords (202) 225-2542 (520) 881-3588 AZ 8th District
Ann Kirkpatrick (202) 225-2315 (928) 226-6914 AZ 1st District
Jerry McNerney (202) 225-1947 925-833-0643 CA 11th District
John Salazar 202-225-4761 970-245-7107 CO 3rd District
Jim Himes (202) 225-5541 (866) 453-0028 CT 4th District
Alan Grayson (202) 225-2176 (407) 841-1757 FL 8th District
Bill Foster (202) 225-2976 630-406-1114 IL 14th District
Baron Hill 202 225 5315 812 288 3999 IN 9th District
Mark Schauer (202) 225-6276 (517) 780-9075 MI 7th District
Gary Peters (202) 225-5802 (248) 273-4227 MI 9th District
Dina Titus (202) 225-3252 702-256-DINA (3462) NV 3rd District
Carol Shea-Porter (202) 225-5456 (603) 743-4813 NH 1st District
Tim Bishop (202) 225-3826 (631) 696-6500 NY 1st District
John Hall (202) 225-5441 (845) 225-3641 x49371 NY 19th District
Bill Owens (202) 225-4611 (315) 782-3150 NY 23rd District
James Matheson Toll-Free Number 1 (877) 677-9743 (202) 225-3011Mike Arcuri (202)225-3665 (315)793-8146 NY 24th District
Dan Maffei (202) 225-3701 (315) 423-5657 NY 25th District
Earl Pomeroy (202) 225-2611 (701) 224-0355 ND At-Large District
Steven Driehaus (202) 225-2216 (513) 684-2723 OH 1st District
Mary Jo Kilroy (202) 225-2015 (614) 294-2196 OH 15th District
Zach Space (202) 225-6265 (330) 364-4300 OH 18th District
Kathy Dahlkemper (202) 225-5406 (814) 456-2038 PA 3rd District
Patrick Murphy (202) 225-4276 (215) 826-1963 PA 8th District
Christopher Carney (202) 225-3731 (570) 585-9988 PA 10th District
Paul Kanjorski (202) 225-6511 (570) 825-2200 PA 11th District
John Spratt (202) 225-5501 (803)327-1114 SC 5th District
Tom Perriello (202) 225-4711 (276) 656-2291 VA 5th District
Alan Mollohan (202) 225-4172 (304) 623-4422 WVA 1st District
Nick Rahall (202) 225-3452 (304) 252-5000 WVA 3rd District
Steve Kagen (202) 225-5665 (920) 437-1954 WI 8th District
Bart Stupak (202) 225 4735 MI (MAYBE)
Brian Baird (202) 225-3536, Vancouver, (360) 695-6292. Olympia, (360) 352-9768, (MAYBE)
senator mark begich (202) 224-3004 toll free. (877) 501 - 6275 just became a MAYBE
Jason Altmire 202-225-2565, Aliquippa, 724-378-0928,
Natrona Heights, 724-226-1304 (MAYBE)
On the Bubble (Major developments from the yes and no columns in the House)
Congressional Dems on Twitter
And here are toll-free numbers we can use to call any Senators or Reps.
At the first number below you must wait through a tape recording urging you to tell your Rep or Senator to vote yes for the health care bill. Just hang on and when the recording is over, you will get the Capitol operator. Just ask for your Rep or Senators office. Then you will either talk to an aid or have the chance to leave a message for him/her to vote NO on the health care bill.
When you use the second number and the Capitol operator comes on, just ask for your Rep or Senators office. Every time I use this number I get the Rep or Senators answer machine, so it may be set up that way all the time...to go to their answer machine. Either way you can leave a message to vote NO on the health care bill!
We need to use these toll free numbers that have been set up for the health care/ BO supporters and illegals to use! After all they are FREE!
1-800-828-0498 , 1-866-220-0044, 1-866-338-1015, 877-851-6437, 877-210-5351
This is from a 2007 contact list of congressional aides. Some might not be there any longer, but worth a try.
Contact congressional aides.
U.S. Senate switchboard: (202) 224-3121
U.S. House switchboard: (202) 225-3121
White House comments: (202) 456-1111
Find your House Rep.: http://www.house.gov/writerep
Find your US Senators: http://www.senate.gov/general/contact_information/senators_cfm.cfm
Toll free to the US Senate:
1-800-882-2005. (Spanish number)
1-800-417-7666. (English number)
Courtesy of a pro-amnesty group, no less!!
The American Middle Class was a phenomenon never seen before in this world and it made this country great. But we were a nuisance...educated, self sufficient, successful, patriotic. It’s hard to manipulate people like that. These bastards just won’t be happy until it’s completely destroyed.
Not sure I understand. I have money in a 40lK, an IRA and individual stocks (I am retired). Is this saying that when I sell a stock at a profit I will have to pay and extra 2.9% in tax? If this is the case where does the “unearned” income enter the picture? To me unearned would mean that the stock has gone up in value but I haven’t sold it, so I don’t have any income other than dividends.
Once your money is inside an IRA, it is effectively on the other side of a fence; and you are theoretically not able to touch it.
[That’s why, for people who wish to own gold or silver in an IRA, they cannot be the possessors of said gold/silver. It has to be in the control of a trustee, and typically resides in a Brinks vault. (Where you pay storage fees, btw)]
Whatever you do with your IRA it is tax free while it remains in the IRA. Win, lose or draw. The idea is that once you withdraw money from the IRA, it is like money that falls from the sky, and which you have to pay your ordinary income tax on. There are no cap gains treatments, there are no deductions for losses. The idea is that you make these withdrawals near your retirement, when you are making no money from the job you retired from, hence whatever growth you can achieve in the IRA over many years can be taken out at your (probably) lower near-retirement tax rate.
But many people have stocks in what’s typically known as a “street” account. (one can of course have both street and IRA accounts at the same time) You just accumulate an extra $10K in your regular ckg acct and send it in to Etrade and start flipping stocks. Those trades make or lose money and perhaps earn dividends. But it’s not a retirement acount; it’s excess money you’ve brought in and would, in the old days, put into a savings account. But that’s no fun. Generally speaking, If you buy and sell a stock for a gain, the gain is called a “capital gain”. if you buy and hold a stock for more than a year, it’s also a capital gain but significantly, the transaction is subject to “capital gains tax treatment”, which is pretty favorable. Along the way, you receive cash dividends for some stocks. This new tax would apply both to the gains you rec’d buying the stock for (say) $20 and selling it for $30, *and* the divs you got along the way. Pretty neat, huh? For them. Incidentally, you have to sell a stock you’ve previously bought to create a gain or a loss. If you never sell it, it’s never a gain nor a loss. There is no taxable event.
“Unearned” income has a fairly precise meaning, at least as far as the IRS is concerned: It’s anything you didn’t exchange your time for; to wit, “An individual’s income derived from sources other than employment, such as interest and dividends from investments, or income from rental property.” If you buy a widget on ebay for $50 and sell it for $80, that is capital gain...unless it is part of a widget-reselling business you own and file a schedule “C” on.
This new situation means that this new 2.9% tax is applied to all your unearned income, and more insidiously, it applies to the *first dollar* of unearned income. I believe it used to apply to unearned income above a certain threshold.
This new tax is very discouraging to investing in stocks, buying real estate for investment, or starting a business. Ask me if I’m surprised.
Upon rereading my reply, I didn’t answer your implied question!
IANACPA but it seems to me that yes, your IRA withdrawal would indeed be subject to this additional tax bite since it came not from your work, but from your evil capitalist investments.
Thank you for your time and effort, much appreciated. Think I understand.
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