Last night on CNN, in an interview with Piers Morgan on his eponymous program, Congresswoman Michele Bachmann spake thus:
“Just one of the taxes [in the Patient Protection Act, aka Obamacare] will be a tax on when people sell their homes. It’s 3.8 percent. For many Americans, they’ll have to pay, in addition to all the other costs at their closing when they sell their home, the seller will have to pay 3.8% of the closing cost to the government for Obamacare … So if you have a $500,000 house, you’ll be having to give something under $20,000 to the federal government for Obamacare.”
This bogus “fact” has been circulating in emails since 2010 and every single reputable fact-checker who has looked at it has found it badly wanting. This includes snopes.com, which follows up on rumors circulating on the internet, and Politifact (which rated it as a “pants on fire” falsehood, and factcheck.org, which called it “utterly false.”
The health care bill imposes no new tax specifically targeted at the sale of homes. The law does have several new taxes in it — very progressive taxes mostly that will hit primarily wealthy individuals and families. The biggest and most important of those taxes — and this is undoubtedly the one to which Bachmann was inaccurately alluding — is a 3.8 percent tax on “net investment income” of individuals with taxable incomes above $200,000 or families above $250,000. At today’s levels of income distribution, 97 percent of Americans would be unaffected by the tax. Repeat: The tax to which Bachmann was presumably referring has no impact on 97 percent of Americans.
That’s the really big whopper Bachmann told last night, by not referring to the provision that she described as a tax that would effect only the richest 3 percent of households.
Now, if you have an income that large, and you sell a home, and if you have made a capital gain (at today’s housing prices, this clearly would not be everyone who sells a home), that gain will be treated as investment income under this provision of Obamacare and you will be assessed this new 3.8% tax on the gain.
Of course, the lesser but still considerable whopper that Bachmann told in her little illustration on CNN, was the suggestion that the tax would apply to the entire sale price of the home. No, even these relatively few relatively wealthy folks who have high incomes and sell, in a given year, a home on which they have made a capital gain, will pay the tax ONLY ON THE GAIN. In her example of a $500,000 home (which is more than double the median home price), if the family sold a home for that amount, and if they had paid, let’s say, $450,000 for the home when they bought it, will pay not “something under $20,000” as Bachmann said, but “something under $2,000.”
The Affordable Care Act provides a lot of benefits, mostly to those who are poor (the Medicaid expansion), or have pre-existing conditions, or get very sick and can no longer be dropped by their insurers, or who do not get insurance from their employers and have to shop the market on their own (the “exchanges”) and the architects of the bill determined that it would be “scored” as not adding to the deficit, which it is.
To achieve that, there are several new taxes in the bill including (by the constitutional logic of the Supreme Court majority) the penalty on those who can afford health insurance but decline to get it — which, of course, they can avoid by buying health insurance. And also including a new 3.8 percent tax on net investment income by families with incomes above $250,000.
I have called the Bachmann re-election campaign to offer her a chance to defend the accuracy of her statement. If they reply to me, I will certainly update this post.