O'Reilly falsely suggests all taxpayers will pay new tax on investment income

Written by Todd Gregory

Published

Bill O'Reilly falsely suggested that health care reform legislation would tax the investment income of all taxpayers, predicting, “People are going to get teed off.” In fact, the tax would apply only to individuals making more than $200,000 a year and families making more than $250,000 a year.

O'Reilly claims “you” have to pay more on investment income

O'Reilly: "[N]ow you've gotta pay three and a half percent more" on investment income. From the March 22 edition of Fox News' The O'Reilly Factor:

O'REILLY: I mean, now we're going to have every -- unearned income, which is interest, capital gains -- now you've gotta pay three and a half percent more. And it's going to jack up to, what, 20 percent, then 23 and a half percent. That's going to stifle investment. It's not going to help the economy. People are going to be looking, “Whoa. I'm only making 1 percent on my bank interest anyway.” And they're in for another 8 percent, from 15 to 23. People are going to get teed off.

Tax affects only individuals making more than $200,000, families making $250,000

Tax limited to upper-income taxpayers. The reconciliation bill that passed the House and is currently before the Senate would impose a 3.8 percent tax on the investment income only of individuals with income exceeding $200,000 per year and families with income exceeding $250,000 per year.

WSJ: Tax “would affect couples with more than $250,000 of adjusted gross income and singles with more than $200,000.” A March 20 Wall Street Journal article reported that the tax “would affect couples with more than $250,000 of adjusted gross income and singles with more than $200,000. It would apply only to income in excess of those limits.” From the March 20 Wall Street Journal article (subscription required):

To help pay for Democrats' sweeping health-care plan, the House version of the bill would impose a 3.8% Medicare tax on investment income for upper-bracket taxpayers.

The levy, which would be effective in 2013 and apply to interest, dividends, capital gains, rents and royalties, represents a U-turn in tax policy. As recently as the administration of former President George W. Bush, Congress lowered the tax rate for capital gains and dividends on the grounds it would stimulate investment in the economy.

[...]

The new tax surfaced only recently as Congress scrambled for revenue to pay for the health-care bill. It would affect couples with more than $250,000 of adjusted gross income and singles with more than $200,000. It would apply only to income in excess of those limits. So if a couple earned $200,000 in wages and $100,000 in capital gains, $50,000 would be subject to the new tax.

Because the tax on investment income wouldn't take effect for three years, that leaves more time to tinker with it.