Email regarding home tax misleading
Provision applies to very few sales
5/20/2012WEST PALM BEACH, Fla. -- An email circulating on the Internet claims anyone who sells a house after 2012 will be hit with a new 3.8 percent sales tax, thanks to an obscure clause in the Patient Protection and Affordable Care Act.
A cause for concern?
The 3.8 percent tax is real, but it affects only people with high incomes who make large profits on the sales of their homes.
"It's not a sales tax; it's a tax on all income, which would include capital gains, and its purpose is to make Medicare solvent," said Palm Beach accountant Richard Rampell. "It's a tax on profit."
The new Medicare tax greatly interests Mr. Rampell's peers, who are devising strategies to soften the tax's effect on their clients if the provision takes effect next year.
A decision about the health care law is expected soon from the U.S. Supreme Court. The key point is whether it is constitutional for the act to require all Americans to buy health insurance.
In April, 2010, when the Affordable Care Act was passed and the email started circulating, Snopes.com and FactCheck.org declared it false. PolitiFact.com gave it a "pants on fire" rating.
That hasn't stopped the misinformation from spreading.
The Affordable Care Act "is set to screw the retiring generation who often downsize their homes," it claims.
The provision, which is meant to help support Medicare, does impose a 3.8 percent tax, but only on individuals with incomes greater than $250,000, and only on those who make a profit of more than $250,000. And only the portion greater than $250,000 would be taxed.
West Palm Beach real estate broker Sherry Lee, who received the email, said some of her clients might have made that kind of profit on a house sale in the years before the real estate bubble burst, but very rarely now.
Still, Ms. Lee thinks it would be unfortunate if even a few couples nearing retirement had to pay the tax, just because they invested well or because they bought their house so long ago that their profit might exceed the $500,000 limit for a couple.
"Even if they made $600,000 and only got taxed on the $100,000, that's $3,800 taken out of the economy," Ms. Lee said.
The email's original source appears to be an April, 2010, blog post on www.gop.gov, which describes itself as "the Web site of the Republican majority in Congress."
The email also says, "The National Association of Realtors is working to get it repealed."
The Realtors association did send a letter to then-House Speaker Nancy Pelosi and Democratic Rep. Sander Levin, then-chairman of the House Ways and Means Committee, saying that it opposes the 3.8 percent tax "in the strongest possible terms" and that the tax would "impair and delay" economic recovery.
But Stephanie Singer, the group's director of communications, is not happy to see her organization mentioned in a chain email. To keep people informed, the Realtors have produced a video and an 11-page brochure explaining tax consequences.
To Jeanette Castillo, who studies social media, the email reflects the state of modern political discourse.
The accuracy of a politically motivated email is rarely the point, said Ms. Castillo, assistant professor in the college of communication and information at Florida State University.
"I found it on a conservative discussion forum and message number 3 said, 'This has been debunked, it's essentially a capital gains tax,' " Ms. Castillo said. "But there were still people coming in afterward, reacting as though it was true. There is a core of people that are going to embrace something like this because it reinforces their political narrative."