Windfall profits tax

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

In the United Kingdom, the Windfall Tax was a tax levied on privatised utility companies.

In 1980, the United States enacted the Crude Oil Windfall Profit Tax Act (P.L. 96-223) as part of a compromise between the Carter Administration and the Congress over the decontrol of crude oil prices. The Act was intended to recoup the revenue earned by oil producers as a result of the sharp increase in oil prices brought about by the OPEC oil embargo. According to the Congressional Research Service, the Act's title was a misnomer. "Despite its name, the crude oil windfall profit tax... was not a tax on profits. It was an excise tax... imposed on the difference between the market price of oil, which was technically referred to as the removal price, and a statutory 1979 base price that was adjusted quarterly for inflation and state severance taxes."

The 96th United States Congress was motivated to enact the tax by several factors:

On August 23, 1988, amid low oil prices, the tax was repealed when President Ronald Reagan signed P.L. 100-418, The Omnibus Trade and Competitiveness Act of 1988. Reagan had objected to the tax during his 1980 presidential campaign and promised to repeal it. As with the enactment, Congress was motivated by several factors:

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