New Medicare taxes, the health insurance tax and penalties for failure to meet coverage requirements will harm the nation's farm and ranch families, the American Farm Bureau Federation told Congress Tuesday.
The new Medicare Contribution Tax, which is a tax on unearned income such as capital gains, will burden farmers and ranchers more than many other taxpayers because farming and ranching is a capital-intensive business, AFBF noted in a statement submitted to the House Subcommittee on Oversight of the Ways and Means Committee.
Further, AFBF said the imposition of the Medicare Contribution Tax when a farm or ranch is sold amounts to a retirement tax on agricultural producers because it will go into effect when farmers sell their businesses to fund retirement. Beginning farmers could be affected as well, as adding this tax on top of capital gains taxes will make it more difficult for them to acquire land needed to get started in business.
Farm Bureau supports repeal of the 3.8% Medicare Contribution Tax that will be applied to unearned income of higher-income taxpayers and the 0.9% Medicare tax that will be imposed on wages and self-employment income above established thresholds for high-income individuals.
According to the Internal Revenue Service, the tax comes into play if the individual's wages, compensation, or self-employment income exceed the threshold amount for the individuals filing status: Married filing jointly, $250,000; Married filing separately, $125,000; Single, $200,000; Head of household, $200,000; and widower with dependent child, $200,000.
Farm Bureau also supports legislation to repeal the Health Insurance Tax, claiming it will raise insurance costs, making it harder for farmers and ranchers to purchase coverage.
In addition, AFBF said the health insurance coverage mandate accompanied by the threat of a tax penalty for noncompliance is only making the situation worse for people unable to afford health care coverage.
"Rural American families already pay a greater percentage of their after-tax family income on health insurance than urban American families," noted AFBF. According to the Council of Economic Advisors, nearly one-quarter of families in rural areas spend more than 10% of their income on health insurance coverage, compared with 18% in urban areas.