Redstate...
Another Charming
Aspect of the ObamaCare Minefield
Posted by Repair_Man_Jack
Thursday, June 16th
Beginning January 1, 2013, ObamaCare imposes a 3.8% Medicare tax on
unearned income, including the sale of single family homes, townhouses,
co-ops, condominiums, and even rental income.
- Congressman Jeb Hensarling. (GOP.gov)...
I would like to praise our President for his political courage and
honesty. While running for office, Barack Obama flat-out told Joe the
Plumber he intended to spread the wealth. I think he sincerely believes
that this taxation would primarily effect the rich, improve America’s
Gini Coefficient, and help pay for his gateway program to Single-Payer
Federal healthcare known as ObamaCare.
Regrettably, this tax will not accomplish this laudable goal. Like a
lot of the poorly-designed, economic programs of this administration,
this program will destroy more wealth than it ever gets around to
actually transferring. The negative externalities of this proposal will
be legion. I will attempt to outline the ones that come to mind in the
post below.
We start with the housing market. This is the most likely place for a
sudden spike in liability for people who are not truly rich by historic
standards. Eighteen US states had Median home sales prices of $223k or
higher according to Trulia.com’s heat map. This implies that almost ½
of these sellers would have been taxed on their proceeds at 3.8%. This
is particularly pernicious in areas such as Hawai’i and Washington, DC
where even very modest and unassuming residences would trigger this
sort of a tax.
Yet this only accounts for the 1st order effects of the taxation. One
of the few good news stories out there on the US Economy was a positive
up-tick in US Housing Starts in May 2011. This provides jobs and income
for contractors and suppliers who have basically had a meager go of it
since maybe late-2007. Surely positive trends will not endure when new
home buyers realize that they will eat a dead-weight loss of $11,400 on
the sale of a $300,000 residence.
This will also have a knock-on unemployment multiplier effect on the
people who pave roads to new subdivisions. It will require fewer
realtors and settlement attorneys to handle the decreased sales volume.
Home values will adjust downward in reaction to the penalty tax that a
homeowner has to pay to escape a current residence. This will lead to a
downward pressure on tax assessments for residential property which
will further complicate the efforts of state and local governments to
run organizations such as schools.
Beyond the effect on the housing market, this also could increase the
difficulty new businesses have in finding the best workforce to hire.
One of America’s great strengths as a nation is the mobility of our
labor capital. Put a 3.8% Escape Tax on the mobility of the American
workforce and potential employers will have to pay more to recruit
out-of-towners, facilitate offsite work collaboration through
technology, or limit their recruiting to the commute range of their
facility.
This insidious tax will severely impact the economic vitality of many
Americans. We currently still enjoy a freedom of movement that makes
America one of the greatest countries that has ever existed. All of
this can no longer be yours, America, if we don’t take charge of our
political system and dramatically change course between now and 1
January, 2013.
Congresswoman Pelosi famously explained to us that we would have to
pass ObamaCare to see what was in it. Now that we’ve seen the glorious
details, we will also have to fire President Obama if we want to make
it go away. Thus, if we want to be able to move out of a decent house
without paying a 3.8% “Change You Can Believe In” surcharge, November
2012 will be time to party like its 1773.
Correction: You would have to own the $300,000 home free and clear to
pay $11,400 on it. If you cleared $100,000 on the deal, you would owe
$3,800.
Read it at Redstate
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