A blog post

Proposed Medicare Tax Increase on High Incomers

Posted on the 22 February, 2010 at 11:19 pm Written by in Taxes

President Obama unveiled a $950 billion proposal for reforming health care today, Monday February 22, 2010.

Did you see the part about Medicare taxes?

Currently the Medicare tax is 2.9% on wages and salaries. You pay half, your employer pays half. Well, if you make enough money you will now be paying 0.9% more: that is, 2.35% instead of 1.45%.

Oh, and you will be paying 2.9% on your investment income such as dividends and interest. That’s new. Yipes!

What is high income? If you are single, then $200,000. If you are married, then $250,000. Notice the marriage penalty.

Remember that the capital gains rate is expected to increase from 15% to 20% next year. Include another 2.9% and you have a 52% jump in capital gains tax rates.