Asurtax is a tax levied upon another tax, also known as tax surcharge.[1]
Theprovincial portion of thevalue-added tax on goods and services in two Canadian jurisdictions,Quebec andPrince Edward Island, was formerly calculated as a surtax on the sticker price plus the federalGoods 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.[2] The Quebec Sales Tax 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.
In 1929, the supertax (which had been introduced in theFinance Act 1909 at the rate of 6old pence in thepound (2.5%) on incomes over £5,000 per year) was renamed to surtax. By 1934, the rate was variable from 1shilling to 7 shillings and sixpence in the pound (5% to 37.5%). It was replaced byincome tax in 1973.
| Year | Income tax | Surtax | Total |
|---|---|---|---|
| 1939–40 | 29% | 41% | 70% |
| 1944–45 | 50% | 48% | 98% |
Previous examples of a broadly-levied surtax in theUnited States include one imposed to help finance theVietnam War during theLyndon Johnson administration. It essentially consisted of calculating one'sordinary 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 highlyprogressive, 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 notanarchists and understood the need for and the positive role played bygovernment in many areas, they wanted none of their tax money going to a war that they felt was immoral.[citation needed] The surtax was repealed well before the Vietnam War ended.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 theAlternative Minimum Tax code in the United States.[when?]
A surtax was proposed as part of the 2009–2010health care reform in the United States.[4]
