New Taxes Kick in in January, including a Marriage Tax
Regardless of how Congress and President Barack Obama resolve the so-called “fiscal cliff” problem, taxes for many Americans will go up come January.
The increases are a result of the new federal healthcare reform law, which imposed higher taxes—especially on high-income earners—to pay for many of the changes.
Among the wealthiest 20% of households, the tax increases will average about $6,000 next year. Altogether, the new taxes are expected to raise $318 billion over 10 years.
The new levies include a boost in the payroll tax on wages and a tax on investment income, including interest, dividends and capital gains.
There is also a bump in the tax that helps finance Medicare. Currently, workers and employers each pay a hospital insurance tax equal to 1.45% on all wages. But by next month, workers will pay an additional tax equal to 0.9% of any wages over $200,000 for single taxpayers and $250,000 for married couples filing jointly.
Tax attorney Ruth M. Wimer at McDermott Will & Emery told The New York Times that the taxes came with “a shockingly inequitable marriage penalty.”
If a single man and a single woman each earn $200,000, Wimer explained, neither would owe any additional Medicare payroll tax. But if they are married, they would owe $1,350, thanks to the 0.9% extra tax on earnings over $250,000.
To Learn More:
New Taxes to Take Effect to Fund Health Care Law (by Robert Pear, New York Times)
Obama’s Health Care Tax Increase Smaller than Reagan’s Tax Hike (by Noel Brinkerhoff and David Wallechinsky, AllGov)
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