By this time next week I fully expect we will have a new health care bill. With the full court press from the President and the Congressional leadership being put on wavering representatives to pass this legislation by using any means available, I fully expect they will get the last four votes they need.
It will take weeks, maybe months, for experts to read the 3,000-page bill and make sense of the consequences. As they do and I get bits of information about how this bill will reshape the lives of Americans, I will inform you of items you need to pay attention to that will affect your financial planning.
One item you should know is that for the first time, the Medicare payroll tax would be applied to investment income, beginning in 2013. A new 3.8 percent tax would be imposed on interest, dividends, rents, capital gains and other investment income for individuals making more than $200,000 a year and couples making more than $250,000.
The way I understand the bill, the tax is imposed on all investment income (not prorata) when your adjusted gross income goes just $1 above $200,000. This is going to afford investors, retirees, and landlords an opportunity to do some exacting tax planning.
A client sent me a more expanded article on what is in the bill which you can read here.