The tax man cometh

It turns out the health care nationalization act imposes a sales tax on real estate sales. A story in the Washington Post purports to debunk it, but actually just argues semantics:

  • It’s not a sales tax or a transfer tax, it’s a Medicare tax. Why I should care about the label is beyond me.
  • It doesn’t affect anyone making under $200k per year. First of all, taxes are a drain on the economy whoever pays them. Second, $200k is not $250k, the level at which Obama promised we would not face a tax increase. But, most importantly, sales taxes are invariably passed on to the buyer, so the fact that the tax is levied on the “rich” has no bearing on who actually pays it.
  • The tax is levied only on the profit. Untrue. More precisely, it depends on how you define profit. The calculation of profit doesn’t figure in inflation, nor does it figure in the amount spent maintaining the home (major improvements, on the other hand, are figured in), so one could easily end up paying the tax despite taking a loss in real terms. Indeed, if inflation soars in the coming years (as it seems like it must) most of the price of a home will be “profit”.
  • The tax is calculated using a very complex formula. Can’t argue with that one.

(Via Cato@Liberty.)

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