A surtax is a tax levied upon another tax, also known as tax surcharge.

Canada

The provincial portion of the

value-added tax A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...

on goods and services in two Canadian jurisdictions, Québec and

Prince Edward Island Prince Edward Island (PEI; ) is one of the thirteen provinces and territories of Canada. It is the smallest province in terms of land area and population, but the most densely populated. The island has several nicknames: "Garden of the Gulf", ...

, was formerly calculated as a surtax on the sticker price plus the federal Goods and Services Tax. On Prince Edward Island, provincial sales tax was assessed at 10% on top of the federal tax (as of 2013) of 5%, resulting in a total effective rate of 15.5% at the time of its repeal. Taxe de Vente de Québec was 9.5%, also assessed on top of the federal tax of 5%, resulting in a total tax burden of 14.975; it, too, was changed in 2013 so as no longer to be a surtax.

United Kingdom

In 1929, the supertax (which had been introduced in the Finance Act 1909 at the rate of 6 old pence in the

pound Pound or Pounds may refer to: Units * Pound (currency), a unit of currency * Pound sterling, the official currency of the United Kingdom * Pound (mass), a unit of mass * Pound (force), a unit of force * Rail pound, in rail profile Symbols * Po ...

(2.5%) on incomes over £5,000 per year) was renamed to surtax. By 1934, the rate was variable from 1 shilling to 7 shillings and sixpence in the pound (5% to 37.5%). It was replaced by

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

in 1973.

United States

Previous examples of a broadly-levied surtax in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., federal district, five ma ...

include one imposed to help finance the

Vietnam War The Vietnam War (also known by #Names, other names) was a conflict in Vietnam, Laos, and Cambodia from 1 November 1955 to the fall of Saigon on 30 April 1975. It was the second of the Indochina Wars and was officially fought between North Vie ...

during the Lyndon Johnson administration. It essentially consisted of calculating one's ordinary federal income tax liability and then adding another 10% to it, the amount of the surtax. As the US income tax system at the time was highly

progressive Progressive may refer to: Politics * Progressivism, a political philosophy in support of social reform ** Progressivism in the United States, the political philosophy in the American context * Progressive realism, an American foreign policy par ...

, the surtax was much higher on those with higher incomes, as a 10% surtax imposed on a tax rate of 20% would result in an overall rate of 22%, and the same surtax imposed on a rate of 50% would result in an overall rate of 55%. Some antiwar protesters refused to pay the tax and stated that while they were not

anarchist Anarchism is a political philosophy and movement that is skeptical of all justifications for authority and seeks to abolish the institutions it claims maintain unnecessary coercion and hierarchy, typically including, though not necessari ...

s and understood the need for and the positive role played by

government A government is the system or group of people governing an organized community, generally a state. In the case of its broad associative definition, government normally consists of legislature, executive, and judiciary. Government ...

in many areas, they wanted none of their tax money going to a war that they felt was immoral. The surtax was repealed well before the Vietnam War ended. Surtaxes can be imposed on other taxes. They are usually imposed on the grounds of moral justification, as they affect only persons who are already paying taxes, rather than extending taxation to new areas or persons who are not previously being taxed. A surtax of 4.3 percent was recently proposed by Congress on incomes over $500,000 to alleviate the alterations to the

Alternative Minimum Tax The alternative minimum tax (AMT) is a tax imposed by the United States federal government in addition to the regular income tax for certain individuals, estates, and trusts. As of tax year 2018, the AMT raises about $5.2 billion, or 0.4% of al ...

code in the United States. A surtax was proposed as part of the 2009–2010 health care reform in the United States.{{cite web, last=Donmoyer , first=Ryan J. , url=https://www.bloomberg.com/apps/news?pid=newsarchive&sid=a3wUXb42NPX0 , title=U.S. House May Include Surtax on Wealthy in Health-Care Package , publisher=Bloomberg , date=2009-07-07 , accessdate=2014-01-25

References

Taxation in the United Kingdom Taxation in the United States

Canada

United Kingdom

United States

See also

References