excess profits tax

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excess profits tax,

levy on any profit above a standard level. Chiefly a wartime phenomenon, it is intended to increase revenue during periods of distress and to prevent businessmen from taking unfair advantage of the increased government spending and consumer demand that normally accompany wars. In 1917 the U.S. federal government adopted such a tax, which continued in various forms and at increasing rates until 1921. It was revived by federal legislation during World War II and during the Korean War. The tax was imposed on the excess over a firm's peacetime earnings or over an arbitrarily decreed earning rate. Great Britain levied an excess profits tax from 1915 to 1921, with a rate varying from 40% to 80%. During the era of World War II, Britain's excess profits tax was revived, with tax rates increased to 100%. Critics contend that such levies discourage productive enterprise by eliminating the profit motive.
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at 1905 (characterizing British excess profits tax as income tax under U.
47% of the flotation value, which meets the general understanding of an excess profits tax (that is, a tax on profits above the deemed normal level of return; here a normal return equals 44.
11] An excess profits tax was also in effect from July 1950 through
The excess profits tax and the wartime hikes in corporate income tax rates were considered serious threats to the economy's postwar recovery.
A licence fee or excess profits tax also had disadvantages, the commission acknowledged.
The Coalition also supports the idea, as set out in the Alternative Federal Budget, that the government's current surtax on financial institutions be increased and established as excess profits tax.
A large range of taxes applies to royalty/tax agreements, of which the most important are income tax at 30%, and an excess profits tax levied at a rate agreed in individual contracts, based on the project's real rate of return.
Some 300 years later -- after France's fall to Nazi Germany but before Pearl Harbor -- Franklin Roosevelt was unable to persuade Congress to enact legislation stipulating that "no corporation be allowed to escape excess profits tax liability on any profits that exceeded 10 percent of invested capital.
Wartime innovations such as the excess profits tax and specialized forms of cost accounting gave rise to an important specialist practice in taxation.
Commissioner held that the surviving corporation in a merger could apply unused excess profits tax credits of the merged corporation against its post-merger income.
Congress approved the first excess profits tax, to help pay for increased military spending.
901-2(a)(1) combines the statutory terms, "income, war profits, and excess profits tax," into one concept: income tax.