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Examples of Tax Increases from Surtax

By: Gerald Prante

The following is a table showing just the surtaxA surtax is an additional tax levied on top of an already existing business or individual tax and can have a flat or progressive rate structure. Surtaxes are typically enacted to fund a specific program or initiative, whereas revenue from broader-based taxes, like the individual income tax, typically cover a multitude of programs and services. amount that taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. returns at various adjusted gross income (AGI)Adjusted gross income (AGI) is a taxpayer’s total income minus certain “above-the-line” deductions. It is a broad measure that includes income from wages, salaries, interest, dividends, retirement income, Social Security benefits, capital gains, business, and other sources, and subtracts specific deductions. levels would be hit with in 2011 under the proposed health care bill in the House. Note that in 2013, the surtax on those with AGI less $1 million ($800,000 for singles) may increase, depending upon the savings from the health care bill.

There appears to be some confusion regarding the marginal tax rateThe marginal tax rate is the amount of additional tax paid for every additional dollar earned as income. The average tax rate is the total tax paid divided by total income earned. A 10 percent marginal tax rate means that 10 cents of every next dollar earned would be taken as tax. concept, which is the tax imposed on the next dollar of income earned. A marginal tax rate is not the same as an average tax rateThe average tax rate is the total tax paid divided by taxable income. While marginal tax rates show the amount of tax paid on the next dollar earned, average tax rates show the overall share of income paid in taxes. . Furthermore, the surtax would not apply to all income. It would only apply to income earned beyond $350,000. If some married couple earns $400,000, they would not pay the 1 percent surtax on the entire $400,000. The couple would only pay surtax on 1 percent of the difference between $400,000 and $350,000, which equals $50,000 x .01, or $500.

AGI Level

Surtax for
Married Return
Surtax for
Single Return
$200,000 0 0
$300,000 0 200
$400,000 500 1,200
$500,000 1,500 2,700
$600,000 3,000 4,200
$700,000 4,500 5,700
$800.000 6,000 7,200
$900,000 7,500 12,600
$1,000,000 9,000 18,000
$1,500,000 36,000 45,000
$2,000,000 63,000 72,000
$5,000,000 225,000 234,000
$10,000,000 495,000 504,000