Medicare Tax on Investment Income?
The U.S. Senate Finance Committee is considering instituting a 1.45% Medicare tax on investment income, including interest, dividends, capital gain, and partnerships and rentals. Currently long term capital gains and qualified dividends are taxed at a maximum of 15%, while the other types of income are taxed at ordinary income rates.
See this story on Bloomberg.com for details this proposal for paying for health care reform.
I personally would not object too much to this tax if it only applied to investment income over a certain amount, say $25,000 annually. With unavoidable multiple state and federal income tax increases on the horizon, I think we'll see an increased interest in retirement savings, life insurance and annuities as a way to defer taxes.
