With the election just over six weeks away, the political letters to the editor are increasing. This is a challenging time here at the Peach as we try to encourage robust debate while also trying to keep to the facts.
I think most letters attacking candidates are somewhat distorted. The challenge for us is determining when they cross the line into outright untruth.
Let me give you two examples of the things we have been dealing with in recent weeks.
In a couple of cases, we have dealt with letters that have referred to a “real estate sales tax” hidden in the Affordable Health Care Act. While there is a tax on some real estate deals in the law, it isn’t the same as the “real estate sales tax” being bandied about on the Internet.
First, the tax is on investment income only, including capital gains. If you built a house in 1970 for $35,000 (which would have gotten you a three-bedroom rambler with a two-car garage back then) and sold it for $335,000 today, you would have a capital gain of $300,000.
However, the health care capital gains tax applies only to individuals with adjusted gross income (AGI) over $200,000 or couples with AGI over $250,000.
Real estate gains include an exemption for a capital gain on a primary residence of $500,000 for married couples and $250,000 for individuals.
The health care law puts a 3.8 percent surtax on the gain from the sale of your house only if you exceed the adjusted gross income threshold and the capital gain threshold on your primary residence.
So let’s say you and your spouse are about to retire from jobs paying you $125,000 each ($250,000 total) and want to downsize. You have no other investment income. If you have a $300,000 gain from the three-bedroom rambler you built in 1970, because of the $500,000 exemption on primary residence capital gains, you would pay no extra tax.
Now, suppose you have the same income, a primary residence and a lake home but no other investment income. If you sell the lake home for a $300,000 capital gain, you would have to pay the 3.8 percent surtax on the portion of the gain over $250,000. That is $50,000 times 3.8 percent or $1,900.
It’s complicated to be sure, but don’t take my word for it. Talk to your accountant.
I took most of this information from the National Association of Realtors Web site. You can be sure if there was a regular sales tax on all real estate transactions, the realtors would be up in arms. While they would rather not be included in the investment surtax formula, they realize that most real estate transactions are not going to be affected.
Letters that include a known factual error as a couple on this subject had, are returned to the writer who can rewrite if he or she wishes.
And finally, we had a letter that engaged in racial stereotypes. While the message was written as opinion, I don’t know what skin color has to do with this election, so we again invited the writer to re-write.
Most of the criticism I have received over the years regarding election letters has come from incumbents who felt their voting records were being unfairly portrayed. I agree, but, again, we try to be as permissive as we can, while sticking to the facts. Opinions can be distortions of facts. The less I have to intervene, the better I like it.
Tom West is the editor of the Peach. He can be reached at 320-352-6569 or by e-mail at [email protected]