As we all know, U.S. government spending is at unprecedented levels. So, how do we pay for all this? The answer: Through tax increases embedded here and there in legislation that largely escapes the notice of the general public.
One such tax increase, effective Jan. 1, 2013, is a 3.8 percent surtax on passive investment income of certain taxpayers, including high-earning individuals, trusts and estates. This tax was imbedded in the Health Care and Education Reconciliation Act of 2010, commonly known as the Health Care Act. Although the funds raised are called the Medicare tax and earmarked to pay for health care, the tax is an income tax and not a Social Security tax.
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