ATRA also implemented an additional Medicare tax on employees of 0.9 percentage points on
incomes over $200,000 for single taxpayers and incomes over $250,000 for married couples. This is in addition to the Medicare portion of the FICA tax, which is 1.45% for employers and 1.45% for employees. The total Medicare tax therefore became 3.8%, of which 2.35% is statutorily paid by the employee. A self-employed individual would pay the entire 3.8%.
This error-filled paragraph alone makes me question the reliability of the results. First mistake: the additional Medicare tax (and Net Investment Income tax) were not part of ATRA, they were part of the Affordable Care Act (aka Obamacare) and took effect in the same year as ATRA, but otherwise completely unrelated.
Second, the article continually uses "income" as a misleading synonym for "taxable income", which is significantly different from AGI in all cases.
Third, it is false that "The total Medicare tax therefore became 3.8%" -- no, only the marginal rate for high earners.
Comments
Here's the study this article is based on: https://www.nber.org/system/files/working_papers/w26349/w263...
Edited to include to a free link to the PDF
This error-filled paragraph alone makes me question the reliability of the results. First mistake: the additional Medicare tax (and Net Investment Income tax) were not part of ATRA, they were part of the Affordable Care Act (aka Obamacare) and took effect in the same year as ATRA, but otherwise completely unrelated.
Second, the article continually uses "income" as a misleading synonym for "taxable income", which is significantly different from AGI in all cases.
Third, it is false that "The total Medicare tax therefore became 3.8%" -- no, only the marginal rate for high earners.