| Health Reform Could Bring New Tax on Sub S Shareholders |
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3/10/2010 |
A payroll tax that funds a key component of Medicare funding could be expanded to begin taxing dividends paid to shareholders of S corporations under the Obama administration's health reform bill. As proposed, the Medicare Hospital Insurance (HI) tax would be applied to non-wage income, including capital gains, dividends, interest, rental, trust, S corporation, and some partnership income.
The Joint Committee on Taxation estimates that such a proposal, limited to the 1.45 percent employee's share of the Medicare tax, would raise taxes by $111 billion over ten years.
Members of the Subchapter S Bank Association are encouraged to contact their members of Congress to express their concerns about the proposal and the increased burden it would place on shareholders of S corporations.
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