Excess-profits tax

Excess-profits tax, tax levied on profits above a legislated level, generally enacted during wars to raise state revenue at a time when some businesses make “windfall profits.” U.S. and British corporations were subject to such taxes during and after World War I (1917–21), and during World War II (1940–45). U.S. excess-profits taxes were imposed during the Korean War (1950–53). Some countries maintain an excess-profits tax in peacetime. The U.S. “windfall profits” tax on oil companies in 1980 was technically an excise tax, imposed on a specific product rather than on profits.

See also: Taxation.