NEWNow you can listen to Fox News articles!
There’s a new blue state tax playbook out there, and it’s not clearly explained to people paying the bill.
It is called a surtax.
And if you think it’s just another tax bracket, you’re already missing the point.
BILL MAHER CALLS OUT BERNIE SANDERS, SAYS HE’S TIRED OF HEARTING THE RICH ARE NOT PAYING THEIR FAIR SHARE OF TAXES.
What is a surtax?
A surtax is a tax placed on top of an existing income tax, not a replacement for it.
In plain English, here’s how it works: You pay your regular state income tax, and if your income exceeds a certain threshold, the state adds a percentage on top of that income.
Surtaxes don’t just tax the rich. It’s about engineering income from high value periods.
It’s the difference between climbing a ladder and someone adding another beat above you when you think you’ve reached the top and hit success. But why should you be penalized for success? It is against capitalism.
Why blue states use surtaxes
Countries use taxes for one simple reason: Targeted revenue without extensive recourse.
AMERICANS CONTINUE TO VOTE WITH THEIR FEET AS HIGH-TAX CITIES STRUGGLE TO COME BACK
Instead of raising taxes on everyone, these states can:
- Focus on high earners, who are often business owners who create jobs.
- They can capture income at the same time, such as business sales and stock gains.
- They can sell it politically as “justice,” even when you pay seven figures in taxes.
- And it works because only a small percentage of taxpayers are directly affected, but they generate a disproportionate share of the revenue.
How does the surtax work in each case
Let’s go through the five states that lead this surtax movement and see what they actually do.
Massachusetts
Massachusetts is a neat example.
YOUNG PEOPLE PLAN TO LEAVE BOSTON BECAUSE OF HIGH HIRES AND ‘SAFETY’, NEW BRANDS SHOW
Basic tax: 5% minimum rate. Surtax: 4% on income over $1 million.
That means that income above the limit is taxed at 9%.
If you sell a business or have a liquidity event, that extra 4% works directly into profit, not all of your income, but everything above the line. What a joy it is to build a business, hire hundreds of people, and get paid big when you sell it.
CALIFORNIA BILLIONAIRES ARE ESCAPING THE STATE WEALTH TAX AT A HIGHLY PREDICTED INCOME.
California
California takes a slightly different approach.
Top basic rate: 12.3% Surtax: 1% on income over $1 million
TAX FIGHT PUT CALIFORNIA INTO CRASH AS BILLIONAIRES LEAVE PURPLE STATES
That brings the effective maximum rate down to 13.3%.
This charge was originally tied to mental health funding, but make no mistake: It’s a permanent cap on high earners.
New Jersey
‘I’M GOING TO FLORIDA AND TEXAS’: NEW BILLBOARDS HIT NY, NJ FOR BIG TIME GOING TO RED STATES
New Jersey operates more like a stepped-up surtax system.
Income over $1 million is taxed at 10.75%.
This isn’t labeled a “surtax,” but in practice, it works like one because once you cross the threshold, your marginal tax rate jumps significantly.
FOUR LESSONS WHY THE ‘BOOM BELT’ MAKES SO LOUD NOISE IN TRANSPORTATION
It’s a millionaire’s charge baked into a scale structure.
New York
New York has one of the most aggressive programs.
THE HOCHUL FROM NEW YORK DROVE ME TO FLORIDA — NOW BEGGING ME TO COME BACK. IT DOESN’T HAPPEN
The state’s top rate: up to 10.9% on the highest income Add New York City’s tax, and top earners can top out at 13%.
Although it is technically constructed as a parenthesis, the “million tax” functions as a surtax because the rates increase sharply at the top.
In Hawaii
Hawaii flies under the radar, but it shouldn’t.
Aerial view of Kauai, Hawaii on a sunny day. (Stock)
THE NEXT GREAT GATE FROM YOUR GREATEST POSSESSION
Maximum rate: about 11%. Recent revisions have added higher brackets to top earners.
It’s not always labeled as a surtax, but the effect is the same: a premium tax layer on higher income levels.
The bad part is what they tell you
Here’s what doesn’t make political talking points:
Surtaxes are not just revenue. Rather, they are about time.
They hit harder when:
- You are selling a business
- You exercise stock options
- You have a one-time cash benefit
ROTTEN LAWS: EVEN YOUR TRASH CAN’T ESCAPE CALIFORNIA’S RED TAPE
In other words, aim for periods of success, not just a steady income. And if you’re successful, you may get more land and pay real estate taxes and property and use taxes where applicable. You can end up keeping as little as 50 cents of every dollar you make.
Real world impact
Exceed that threshold, and your marginal tax rate jumps immediately.
In Massachusetts, that extra 4% can mean:
$40,000 out of every $1 million and hundreds of thousands, maybe millions, lost in going out of business.
And once you factor in corporate taxes, the total tax rate becomes more realistic.
The Bottom Line
Surtaxes don’t just tax the rich. It’s about engineering income from high value periods.
They are accurate. They were directed. And they are increasing.
CLICK HERE TO DOWNLOAD THE FOX NEWS PROGRAM
My advice to all Americans: Be careful that this is not the way the federal government is in the future.
Because if the situation reveals that we can quietly add another layer on top, it becomes very difficult to remove it.
CLICK HERE TO READ MORE FROM TED JENKIN
