Windfall profits tax

windfall profits tax

A windfall profits tax is a tax on profits that ensue from a sudden windfall to a particular company or industry.

United States
In 1980, United States federal legislation was passed that levied such a tax on oil companies because of the profits they earned as a result of the sharp increase in oil prices brought about by the Arab oil embargo. Since then, the tax has not been reenacted, however with gas prices once again reaching record levels there is renewed pressure on the U.S. government to bring back the tax. Amid low oil prices, the tax was ended in 1988 by President Ronald Reagan.

The Congressional Research Service has analysed that the windfall profit tax brought in $80 billion in extra revenues for the United States government, which was far less than the projected $393 billion. Also, domestic oil production by oil producers was said to be lowered.

These are not to be confused with the excess profit taxes of WWI, WWII, and the Korean War eras. Windfall Profit Taxes are more of an excise-type of tax.

Taxes

What is tax?

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as unpaid labour

Interesting articles

Filling The Self Assessment Tax Return Detailed Profit And Loss Account

Getting a Tax Credit for Your Kids

Hidden Tax Opportunity For Tax-Deferred Investments

11 Year End Tax Savings Tips

Tax Information for Small Businesses

Interesting Facts About The New Business Tax Law

Small Business Tax Help Are You Claiming Enough Deductions

Debt Settlement What About The Income Taxes