surtax

A surtax is an additional tax levied on top of an existing tax, typically introduced to raise revenue quickly or to address a specific fiscal objective. Surtaxes may be temporary or long-lasting and can apply to different bases, including income, corporate profits, wealth, or consumption.

An income surtax adds to the base income tax payable by individuals, often applying only to the portion of income above a threshold or at higher marginal rates. A corporate surtax raises the tax on company profits, while wealth or property surtaxes charge on net worth or asset value. In some systems, a consumption or sales surtax adds to standard value-added tax or sales taxes on selected goods or services.

Surtaxes are usually administered by the same tax agencies that collect the baseline tax and may appear as a separate line item on tax returns. They are often designed to be temporary emergency measures or to achieve progressive taxation by targeting higher earners or larger fortunes.

Historical practice varies by country. For example, during World War II the United States imposed a personal income surtax to supplement the normal income tax. In the United Kingdom, a separate Surtax was levied on high earners for several decades after World War II.

Critics note that surtaxes can complicate tax systems and influence economic behavior, while proponents argue they offer a flexible way to raise revenue without broadening the base of the underlying tax.