What do health care reform and real estate sales have in common. On the surface maybe not much. This morning after reading about the House vote in The Washington Post, it dawned on me (in the shower where most of my best thinking occurs) that the health care bill will have an effect on real estate and here is why I think so.
Employers will hold back on employing new people until they are sure how the final bill will affect them. I am already witnessing this through my friends who have had interviews where the employer has said just that. In the House bill, any business with over $500,000 in payroll must provide health insurance or pay a fine of up to 8%. Wow, if I were an employer close to $500,000 in payroll, then I wouldn't hire any more employees. Instead, I would hire contractors, temps, and outsource whatever I could overseas at $3.00 an hour (no lie, you can get quality admin work done in India or the Philippines for that rate).
As I noted, the first thing employers are going to do is wait and see which will keep unemployment high for some time to come. Part two of this scenario is where l hire contractors and issue a 1099 instead of hiring employees (payroll) and issue a W-2 at the end of the year. We as real estate agents realize that its alot easier to get a loan with a W-2 than a 1099 and the same goes for assisting our clients in getting approved for a loan.
Where the additional surcharge on folks making over $500,00 per year and families over $1,000,000 might come into play. I don't have all the ends and outs of what limitations will be to the rich, but the rich are not stupid if they get rich and stay rich (certain celebrities excluded). There may be limits, and I think there will be, on deductions for personal income. That's all the more reason to speak with a tax attorney/estate planner and get your financial house in order. There is not going to be an inflation escalator in the House version of this bill so eventually, we will all suffer from tax creep like with the AMT bill passed two or three decades ago. Most people making over a million a year have tax planners and brokers, etc that they are in regular contact with. These professionals will be getting rich themselves assisting folks hit with the higher bracket taxes and the 5.4% surcharge with forming corporations, LLCs, trusts and other forms of LEGAL tax aversion (notice I didn't say evasion which is illegal) to avoid paying the surcharges. What will eventually happen is that the middle class will end up paying for the health care bill or the whole country will drown in a sea of debt.
Enough of my rant, I actully thought of all of this in about a 5 to 7 minute shower. In theory, I am for a concentrated effort to provide affordable health care to as many Americans as possible at as reasonable a cost as possible. I am against slamming a 1990 page document down the throats of the citizens of this country and calling it health care reform.
Comments(0)