Investment Tax to Hit the Wealthy

Last updated on December 10, 2012

The end of the year will be marked by talk of increase in taxes. The economy is slowly recovering, and to help it get back to its feet, the government is looking to get money from wherever it can.

Although increase in income tax for the rich has not seen the green signal yet, there are other taxes that will affect the wealthy starting Jan 1st, 2013. These are an increase in payroll taxes on wages and new taxes on investment income including interest, capital gains and dividends. That has been finalized by the Obama administration.

With many tax breaks expiring this year, an average American taxpayer will be paying more to the IRS. For the wealthy, the new year will bring taxes on health insurance and investment too. Economists estimate that among the most affluent fifth of households, those affected by the taxes will be paying $6,000 on an average starting 2013.

For Medicare, both employers and employees will be paying a hospital insurance tax of 1.4 per cent on all wages. Anybody having wages over $200,000 will be paying an additional tax equal to 0.9 per cent. The threshold is $250,000 for married couples filing jointly. These new taxes are here to stay. They are predicted to raise $318 billion in over 10 years.

Most American taxpayers will see an increase in the taxes they pay, some because of new taxes and some because of the expiring of old tax breaks. But if the economy recovers fast, it will be worthwhile.