Vail Daily letter: Facts wrong, ‘hater’
December 1, 2012
I am visiting Vail Valley over Thanksgiving to do some skiing and could not help but note the lack of correct information on the Affordable Care Act in the letter from Michael Cacioppo.
His example of the business with 30 employees does not make any sense. The Affordable Care Act does not require businesses with 30 employees to provide health insurance. The threshold for required coverage is 50 employees.
The 3.8 percent tax that he mentions in connection with his question on “what happened to the promise that taxes would only go up on people earning more than $250,000” is the Medicare tax on investment income.
It only applies to investment income of couples with income in excess of $250,000.
Much misinformation has been circulated on this tax on the Internet. It does not apply to the sales price of a residence. It applies only to taxable gain and then only if you meet the $250,000 income threshold.
In addition the first $500,000 of gain on the sale of a couple’s principle residence is exempt from income tax and would not be subject to this tax.
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His example of the small business that might be laying off employees six, seven or eight is also totally incorrect. This size business is not required to provide health insurance to employees. Rather this size business will reap significant advantages from Affordable Care Act.
The insurance exchanges will allow this size business to cover employees as the part of a large pool of insureds so that the illness of a single employee will no longer cause premiums for the small group to skyrocket. In addition, this size employer will be entitled to tax credits to partially subsidize insurance provided to employees.
Reverting to the Clinton era tax rates hardly spells doom for the stock market. It did quite well in the ’90s when these rates were in effect. Compare that to a decline in the major market indicators during the eight years of the Bush administration with the current rates in effect.
Capital gain rates would go back to 20 percent from the current 15 percent for high-income taxpayers. Dividends would be taxed at the same rate as compensation for services. The bulk of the dividends are in the hands of the wealthy.
Most of us average people hold much of our wealth in retirement plans such as 401(k) plans and IRAs. Dividends and capital gains earned in these plans are taxed at the higher ordinary income tax rates when distributed to the retiree, thus most people do not get the benefit of the lower dividend or capital gain rates.
Cedar Rapids, Iowa