The word is out: Two new taxes on the affluent and wealthy will take effect as scheduled next year as a result of the Supreme Court’s decision upholding the health-care overhaul. One is a new 3.8% tax on net investment income, and the other is a 0.9% increase in the Medicare tax on wages and self-employment income.
Both levies apply to joint filers with adjusted gross incomes above $250,000 ($200,000 for singles). A recent Wall Street Journal article discussed the basics ("Get Ready for the New Investment Tax," June 30), but many questions remain. Here are some answers.
Inflation indexing. Unlike many other tax provisions, including the estate-tax exemption, the $250,000/$200,000 threshold for these two new taxes isn’t adjusted for inflation, according to Congress’s Joint Committee on Taxation. This means lawmakers likely will face a dilemma—either pass an expensive "patch" every year or two or let the taxes apply to thousands of additional taxpayers because of inflation.