Obama Plans 'Backdoor Tax' to Pay for Health Care

A stealth provision in President Obama’s latest healthcare proposal dramatically increases taxes on the wealthy — extending Medicare taxes for the first time to “unearned” investment income.

The new 2.9 percent tax would apply to interest, dividend, annuity, royalty, and rent payments.

Under current law, Medicare payments come from salaries alone.

But Obama wants a Medicare tax to be paid on the investment income accrued by individuals making more than $200,000 a year and couples making more than $250,000.

The plan doesn’t make it clear if capital-gains income is subject to the 2.9 percent tax. If it is, the wealthy would face a capital-gains tax rate of 22.9 percent. That’s because the rate already is slated to increase to 20 percent next year from 15 percent currently.

In addition, households with income above $250,000 would see another 0.9 percent added to their Medicare tax on their normal working income. It would put their rate at 2.35 percent.