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Eaton Vance Tax-Managed Diversi Message Board

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  • mike57dk mike57dk Aug 9, 2010 11:03 AM Flag

    Sneaky / Huge new tax INCREASE for all starting in Jan....

    Good response....and I agree that the law ( HR 3590 ) has been written in a fashion that makes it unclear ....

    However...Title IX Revenue Provisions- Subtitle A; Revenue offset - ( first clue that they are raising taxes is the title of this provision in HR 3590 ) ....clearly states...Sec 9002 - "requires employers to include in the W-2 form of each employee THE AGGREGATE COST OF APPLICABLE EMPLOYEE-SPONSORED GROUP HEALTH COVERAGE."

    That is vastly different from requiring the W-2 form to detail the amount of 401-k contributions or the amount of social security taxes paid during the calander year suggested by the Wikipedia summary ...If that were true ...the amount would be unimportant ...and a simple box could be checked ....which answers the question ..." Coverered by employer health plan ? - YES / NO ... or exactly the way the W-2 reporting requirements detail coverage by an employer pension plan....YES / NO.

    I would again note that the FICA taxes and 401-k contributions were NOT added to the W-2 form under a provision labeled ..."REVENUE PROVISIONS" of the Internal Revenue Tax code ....and submit that the name betrays the real intention of our Congressional ...they are looking for a way to dramatically INCREASE tax revenue ...without calling it a tax increase.

    Here is a question to consider: The cost of Medicare to our retirees would probably have to be considered a health plan coverage ....probably at least $1,000 per month of benefit coverage ( conservative estimate ) ...This approximate $12,000 per year of "benefit" would be added to the Social Security income recieved ....many citizens recieve about $18,000 per year from social security ...( which was "guaranteed" not to be taxed when incepted,by the way ...)...So a low income retiree earning $18,000 per year ...would now sport a W-2 of $30,000....and ASSUMING an overall tax rate of just 15% ...would have a Federal Income tax bill of $4,500..( 15% of $30,000) ...or an effective 25% tax rate of his true $18,000 income .... This is a GIGANTIC tax increase .... but wait ...there more ...$30,000 W-2 earners, under the proposed Administration's new tax rates for 2011 ...will NOT be paying 15% ...but a much higher rate ...lets say a marginal 20% ...Thats a $6,000 tax bill ...or 33% of pre-tax ACTUAL income ...again ...most people will NOT have adjusted their respective W-4 withholding forms ....( especially seniors living on a fixed income ) and will be staring at a huge tax bill come next April 15, 2012 when the 2011 taxes come due ...This will be a cruel hardship for many ...

    Summary - I hope you are RIGHT and the conclusion reached is incorrect. The history of Congress and taxation tends to support the contention that this is in fact a tax increase ...the name of the paragraph that requires compliance to the tax code lists this as a "revenue-provision" ....and common sense dictates that if this were truely a simple "reporting requirement" ...such as the Employer Pension coverage ...the tax code would not dictate that the value be added to the income recieved to form a new and higher "aggregate" income amount.

    Thanks for the reply ...Let's hope that you are right ....regards....

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