Most good lies have a kernel of truth in them, giving them undeserved credibility. Here's a great example of a lie intended to scare senior citizens into opposing both the Affordable Care Act (aka: ACA/ObamaCare) and President Obama as well.
Last week, I spoke to the GE Oldtimers Association, a luncheon group of about 50 older gents (and a few women) who are retired managers and engineers from the GE jet engine plant in Lynn, Massachusetts. They meet at Anjelica's Restaurant in Middleton, MA. They are nice, smart, informed, and attentive. They had lots of questions about the ACA, and we had a great discussion.
Near the end, some of them asked me about unsolicited emails they were getting claiming that the ACA, beginning in 2013, would impose on them a new Medicare tax of 3.8% when they sold their homes. Now, I knew that the ACA creates a new 3.8% Medicare tax on unearned income in excess of $200,000 for individuals and $250,000 for couples. But a tax on principal residences? It didn't sound right. Rather than guess, I asked them to send me the email and I would check it out.
So here's the email (addresses deleted -- but notice the date, really recent):
Sent: Sunday, March 11, 2012 10:30 PM
Subject: If you own a home--
Sent from my iPhone
Begin forwarded message:
sorry I hate passing this stuff on but its pretty good
Subject: If you own a home--
If you own a home, Please read this. THIS WILL BLOW YOU AWAY !!!!!
The National Association of REALTORS is all over this and working to get it repealed, before it takes effect. But, I am very pleased we aren't the only ones who know about this ploy to steal billions from unsuspecting homeowners. How many REALTORS do you think will vote Democratic in 2012?
Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home, etc. When did this happen? It's in the health care bill and goes into effect in 2013.
Why 2013? Could it be to come to light AFTER the 2012 elections? So, this is "change you can believe in"? Under the new health care bill all real estate transactions will be subject to a 3.8% Sales Tax.
If you sell a $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Does this make your November and 2012 vote more important?
Oh, you weren't aware this was in the Obamacare bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either
I hope you forward this to every single person in your address book.
VOTERS NEED TO KNOW.
So, I sent the email to a contact in the Obama Administration who conferred with the U.S. Department of the Treasury. Here's what is NOT mentioned in the email:
First, the base value of any investment is not subject to the tax. So if you paid $350,000 for a property (plus improvements), the first $350K plus the value of the improvements is not subject to tax.
Second, over that amount, $250K ($500K for a couple) is not subject to the tax for a principal residence in which one has lived for at least two years.
Third, over that, the only gain subject to the tax is more than $200K for an individual or $250K for a couple.
So, let's say my wife and I bought our home for $400K, and sold it for $1 million. No tax on $400K, no tax on another $500K, and then no further tax on another $250K. In other words, our obligation under the "section 1411 tax" = $0.00.
Do the math on your own place. If there were a tax, it would be 3.8% on any amount over all these exemptions.
Now, go back and look at that email:
"...after 2012 you will pay a 3.8% sales tax on it? That's $3,800 on a $100,000 home, etc. When did this happen? It's in the health care bill and goes into effect in 2013."
And the weblink in the email? It takes one directly to the House GOP Conference webpage. When I went there last week, the blog post was still available with all the false information. I went there this evening, and the link had been removed.
By the way, I went to the website of the National Association of Realtors to see if they had a different take on this matter. Here's what their website says:
3.8% Tax to go into Effect in 2013The health care legislation enacted in 2013 included a new tax that was designed to affect upper income taxpayers. The 3.8% tax is imposed ONLY on those with more than $200,000 of Adjusted Gross Income (AGI) ($250,000 on a joint return). The tax applies to investment income, defined as interest, dividends, capital gains and net rents. These items are all included in an individual's AGI. A formula will determine what portion, if any, of these types of investment income would be subject to the tax.
The tax is NOT a transfer tax on real estate sales and similar transactions. Not long after the tax was enacted, erroneous and misleading documents went viral on the Internet and created a great deal of misunderstanding and made the tax into something far more draconian than the actual provisions.
The new tax does NOT eliminate the benefits of the $250,000/$500,000 exclusion on the sale of a principal residence. Thus, ONLY that portion of a gain above those thresholds is included in AGI and could be subject to the tax.
REALTORSÂ® should familiarize themselves with the tax, but should not advise their clients about the application of the tax. The amount of tax will vary from individual to individual because the elements that comprise AGI differ from taxpayer to taxpayer.
Good for the Realtors for spreading the truth.
Last week, I saw Julie Rovner from NPR and she told me she heard about this false tale last year and was amazed to hear it's still going around after she had trashed it.
It's still going around. Just ask the GE Oldtimers.
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