The New Hampshire Union Leader originally published this column on July 6, 2012:
For Granite Staters who are disappointed that the Supreme Court largely upheld Obamacare, there may be a measure of ironic justice coming. Sen. Jeanne Shaheen, the only surviving member of the state’s congressional delegation who voted for the Affordable Care Act, will start paying the higher taxes included in the law before middle class taxpayers do.
Bill and Jeanne Shaheen are financially successful investors. According to new personal financial disclosure reports made public a few weeks ago, the Shaheens own assets worth as much as $6.1 million, mostly in real estate. Even though the down market has affected the net value of their holdings and they carry nine separate mortgages on various properties, the Shaheens likely have a net worth of a couple of million dollars. Assuming real estate values rise from current lows, they will be in a great position to cash out one day. Good for them.
So when President Obama broke out the class warfare rhetoric and attacked “wealthy investors” last week at Oyster River High School in Durham, he was talking about people like the Shaheens. They are among those whom Carol Shea-Porter disparages as the “1 percent.”
In President Obama’s world, anyone who has become rich must have done so not by hard work, risking capital, or creating jobs for others, but by taking advantage of the middle class and the poor. Rent collecting commercial landlords like the Shaheens fall into this category. They must be punished.
“What we need is a tax code…that asks the wealthiest Americans to pay a little bit more,” the President said in Durham last week. “Is there anybody here who can afford to pay thousands of dollars to give folks like Mr. Romney or me another tax cut?”
Presumably Sen. Shaheen, who was there, did not raise her hand and shout, “Me! Me!” The Shaheens have middle-class backgrounds. They worked hard, saved and invested. The sent their kids to the local public school a mile from their upper-middle-class home: Oyster River.
Investors like the Shaheens will certainly “pay a little bit more” under Obamacare. The Supreme Court upheld the new 3.8 percent surtax on investment income — rents, dividends, interest and capital gains, exactly the way the Shaheens get paid on their investments. A new .9 percent increase in the Medicare tax for couples earning more than $250,000 a year goes into effect, too. Given that Shaheen’s Senate salary is $174,000 and her husband is a partner in his namesake law firm, one can assume they qualify even before counting their investment income, which could have been as high as $147,500 last year, based on the senator’s disclosure.
If all that investment income was marginal revenue over the $250,000 adjusted gross income threshold and they earn the same amount in 2013 as they earned last year, the Shaheens could owe close to $7,000 in new Obamacare taxes next year on their investments alone.
After listening to the President’s speech, the Shaheens might have excused themselves to call their accountant, who might have advised them to liquidate their holdings before the end of the year. If they wait to sell, any capital gain will also be subject to 4.7 percent in combined Obamacare taxes on top of longterm capital gains taxes — taxes that are scheduled to rise from 15 to 20 percent at the end of the year if Sen. Shaheen and her colleagues don’t extend current capital gains tax rates.
The President would like you to believe that only leeches like the Shaheens will end up paying higher taxes under Obamacare, but that’s not true. Tax increases aimed at the wealthy inevitably hit the middle class because that’s where the real money is. The vast majority of those who will end up paying the Obamacare tax for not carrying insurance will be middle-class and lower-income families. This will violate the President’s pledge, first made in Dover in 2009, that he would not raise taxes on anyone making less than $250,000 a year.
Investors — even senators who voted for the health care law — will pay up first. Then middle-class taxpayers will.
Fergus Cullen, a freelance columnist and a coach at Oyster River High School, can be reached at email@example.com.