Surtax

Dollar moving up. Money finance growth chart graph stock marketAn income surtax is an additional tax imposed on the income of individuals earning above a certain threshold – usually, in the millions of dollars.

Several surtax options have been floated in recent years though two have risen to the top:

  • The surtax included in President Biden’s Build Back Better framework would impose a 5 percent surtax on the annual adjusted gross income (AGI) of individuals earning between $10 and $25 million, plus an additional three percentage points on the annual AGI of those earning more than $25 million.
  • The Millionaires Surtax introduced by Senator Chris Van Hollen (D-Maryland) and Congressman Don Beyer (D-Virginia) would impose a 10 percent surtax on the annual AGI of individuals reporting more than $1 million in taxable earnings and $2 million for married couples filing jointly.

Because they are based on adjusted gross income, both surtax options would equally tax income that comes from salaries and that which comes from capital gains — earnings on things that increase in value like real estate, businesses, or investment shares.

These two surtaxes on the ultra-rich have been estimated to raise $230 and $700 billion over 10 years, respectively.