There is no sales tax provision in Obamacare

There is a misleading email going around that is getting people riled up regarding the health care bill. While I am generally in favor of getting people riled up in support of a good cause, there is a problem with this one.

The email says the following:

Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax? The bulk of these new taxes don't kick in until 2013 (presumably after obama's re-election). You can thank Nancy, Harry and Barack and your local Democrat Congressman for this one. If you sell your $400,000 home, there will be a $15,200 tax. This bill is set to screw the retiring generation who often downsize their homes. Is this Hope & Change great or what? Does this stuff makes your November and 2012 votes more important? Oh, you weren't aware this was in the obamacare bill? Guess what, you aren't alone. There are more than a few members of Congress that aren't aware of it either (result of clandestine midnight voting for huge bills they've never read). AND, there are a few other surprises lurking.

Why am I sending you this? The same reason I hope you forward this to every single person in your address book.

People have the right to know the truth because an election is coming in November!

First of all, there is no sales tax provision. Yes, there is a 3.8% Medicare surtax on investment income, and yes investment income can include capital gains from the sale of real estate. But it is not a tax on gross proceeds, which would be like a sales tax.

Second, even if a person does have some capital gains from the sale of a property, if the particular piece of real estate happens to be a "qualified personal residence", the first $500K (married)/$250K (single) in capital gains is exempt from all tax, including this new tax.

And third, the 3.8% Medicare surtax only applies to those making more than $250K (married)/$200k (single) in income.

But I do believe that the 3.8% Medicare surtax on investment income in general is a big problem. It’s a tax on capital and will encourage those people who have capital to spend more time and effort trying to avoid taxes rather than putting their capital toward its most profitable and productive use.

And even more troubling, the $250K/$200K threshold is UNINDEXED, meaning there is no inflation adjustment. So it’s going to impact more and more people over time. Eventually everyone.