FACT CHECK: Viral Image Claims To Show Tax Increases From The Affordable Care Act
An image shared on Facebook purportedly shows various tax rates that increased on July 1, 2014, due to the Affordable Care Act (ACA).
The tax increases went into effect in January 2013 as part of the American Taxpayer Relief Act of 2012, and most of the rates cited in the post are inaccurate.
The post attempts to link several alleged tax increases, which purportedly took effect on July 1, 2014, to the ACA, also known as Obamacare. (RELATED: 4 Claims From The Final 2020 Presidential Debate)
“Here’s what happened on July 1st 2014: Top Income Tax bracket went from 35% to 39.6%,” reads the post. “Top Income Payroll Tax went from 37.4% to 52.2%. Capital Gains Tax went from 15% to 28%. Dividend Tax went from 15% to 39.6%. Estate Tax went from 0% to 55%. These taxes were all passed under the Affordable Care Act, otherwise known as ‘Obama Care.'”
The tax increases came from the American Taxpayer Relief Act of 2012 that went into effect in January 2013, and the extent to which many of the tax rates increased appear to be inaccurate.
While the marginal income tax rate did go from 35 percent to 39.6 percent, it did so effective January 2013 due to the American Taxpayer Relief Act of 2012, according to a report from the Congressional Research Service (CRS). Under the same law, the top marginal tax rate on capital gains and dividends also increased from 15 percent to 20 percent. Those increases applied to single filers with taxable income over $400,000 and married joint filers with taxable income over $450,000, per the CRS report.
The top marginal tax rate on estates rose from 35 percent to 40 percent in 2013 due to the American Taxpayer Relief Act, according to the CRS report. It also extended “the $5 million per decedent exemption amount (indexed for inflation)” and “the gift tax parameters of a $5 million exemption level (indexed for inflation),” per the same report. The estate tax was zero for the estates of individuals who died in 2010.
Garett Watson, a senior analyst at the Tax Foundation, and Erica York, an economist at the Tax Foundation’s Center for Federal Tax Policy, told Check Your Fact in an emailed statement that the estate tax being zero percent for 2010 was due to the 2001 Bush tax cuts. (RELATED: Did Joe Biden Call Black Americans ‘Super Predators’ In 1994?)
“The 2001 Bush tax cuts phased out the estate tax so it would reach 0 by 2010, but be reinstated starting in 2011. In 2010, the new Congress intended to close the gap but couldn’t reach an agreement so it remained at 0. Many people speculated that it could be applied retroactively, so while under law the estate tax did not apply in 2010, it remained optional to pay what would have been due. These changes were unrelated to the ACA,” Watson and York said.
The Facebook post appears to be combining the federal income tax and payroll taxes when it references the “income payroll tax.” No combination of the federal income tax and the Social Security and Medicare payroll taxes produced a top marginal rate of 52.2 percent at the time, according to FactCheck.org and PolitiFact.
Tax increases did occur under the ACA. The law imposed a 3.8 percent surtax on net investment income, including capital gains and dividends, on individual filers making over $200,000 in modified adjusted gross income and married joint filers making over $250,000 in modified gross income, according to Reuters. It also included an additional 0.9 percent Medicare tax on “individual’s wages, Railroad Retirement Tax Act compensation and self-employment income” with the same threshold as the surtax. Those went into effect Jan. 1, 2013, not July 1, 2014, according to the Internal Revenue Service.