The White House claims to have abandoned the House’s surtax on people making over $1 million a year, but that turns out not to be true. Well, technically it’s true, because the surtax now applies to people making over $200 thousand a year.
The provision is buried three clicks deep in the president’s health care proposal. On “high-income” households, it would impose a new 0.9 percent tax on all income, plus an additional 2.9 percent on “unearned” income. Furthermore, there’s a big marriage penalty. The threshold is $200 thousand for singles, and just $250 thousand for couples filing jointly. So if both spouses work, the threshold is actually $125 thousand per spouse.
Don’t be consoled if you make under $200 thousand. There’s no indication that the high-income threshold will be indexed for inflation, so it will bite everyone eventually. Yes, there’s a good chance that Congress with fix it every year as it does with the AMT, but that means that any deficit predictions for this proposal are worthless.
(Via the Wall Street Journal.)
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