Surtax

AAA

DEFINITION of 'Surtax'

A tax levied on top of another tax. A surtax can be calculated as a percentage of a certain amount or it can be a flat dollar amount. A surtax is generally assessed to fund a specific government program, whereas regular income or sales taxes are used to fund a variety of programs. Thus, one unique feature of a surtax is that it allows taxpayers to more easily see how much money the government is collecting and spending for a particular program.

INVESTOPEDIA EXPLAINS 'Surtax'

For example, in 1968, President Johnson enacted a 10% surtax on individual and corporate income to help pay for the cost of fighting the Vietnam War. While most taxpayers probably did not know what percentage of their tax dollars were going toward military spending, they could easily see how much extra money they were being asked to contribute specifically to the war effort.

RELATED TERMS
  1. Direct Tax

    A tax that is paid directly by an individual or organization ...
  2. Income Tax

    A tax that governments impose on financial income generated by ...
  3. Indirect Tax

    A tax that increases the price of a good so that consumers are ...
  4. Surcharge

    A fee or other charge that is added to the cost of a good or ...
  5. Corporate Tax

    A levy placed on the profit of a firm, with different rates used ...
  6. Self-Employment Tax

    Money that a small business owner must pay to the federal government ...
RELATED FAQS
  1. What's the difference between regressive and progressive taxes?

    The U.S. federal tax system and local and state tax systems are complex in that they combine progressive, regressive and ... Read Full Answer >>
  2. How are transfer prices set?

    The United States, like most nations, does not want to allow transfer pricing methods that reduce the amount of taxes the ... Read Full Answer >>
  3. How is compound interest taxed?

    Compound interest is money that is earned and added to a principal balance and then earns additional interest. Adding interest ... Read Full Answer >>
  4. Where do deferred tax liabilities come from?

    A deferred tax liability is the result of differences in the way a company does its financial accounting for reporting purposes ... Read Full Answer >>
  5. What's the difference between general, limited and joined venture partnerships?

    Partnerships, which can come in both general and limited forms, are a separate type of business structure from joint ventures. ... Read Full Answer >>
  6. Do companies measure their cost of debt with before- or after-tax returns?

    Cost of debt is most easily defined as the interest rate lenders charge on borrowed funds. When comparing similar sources ... Read Full Answer >>
Related Articles
  1. Bonds & Fixed Income

    War's Influence On Wall Street

    Blitzkrieg? Dawn raids? Sounds like the markets and the battlefield have a few things in common.
  2. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  3. Options & Futures

    Increase Your Disposable Income

    Here are four quick and easy ways to up your spending money.
  4. Bonds & Fixed Income

    Dragons, Samurai Warriors And Sushi On Wall Street

    From samurai to sushi, there's no denying the East Asian influence on investing terminology.
  5. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  6. Taxes

    OK, So I'll Be Smarter Next Tax Time

    5 tax resolutions to start on right now for a smoother tax return next April 15.
  7. Taxes

    What To Do If You Lost Your W-2

    There's no need to panic if you don't have your Form W-2 to file taxes, there are easy ways to gain access to the missing form or file without it.
  8. Taxes

    Will Itemized Deductions Get You A Bigger Refund?

    April and taxes are due soon. If you need to file your return, you might have to decide if itemizing your deductions this year will net you a better deal.
  9. Taxes

    The First Thing You Should Do With Your Tax Refund

    Nobody likes to pay taxes, but everyone loves to get a tax refund. When the check arrives in the mail, it's hard to resist spending it on some indulgence.
  10. Taxes

    How Does An IRS Audit Work?

    It doesn't automatically mean an IRS agent will be ringing your doorbell. Here are the different types of IRS audits and how to handle them.

You May Also Like

Hot Definitions
  1. Fiduciary

    1. A person legally appointed and authorized to hold assets in trust for another person. The fiduciary manages the assets ...
  2. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  3. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  4. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  5. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
Trading Center