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https://theconversation.com/as-nz-workers-and-households-tighten-their-belts-why-not-a-windfall-tax-on-corporate-mega-profits-too-194720>
"Record profits reported by banks, fuel retailers, energy companies and other
businesses at a time many New Zealanders are struggling to make ends meet have
seen people asking whether it’s time to introduce a “windfall tax” – to be
triggered whenever an industry has made “too much profit”.
But what is a windfall tax? How much is “too much profit”? And do windfall
taxes actually work? History, it turns out, can tell us a little about taxing a
windfall.
A windfall is simply a large amount of money that is received unexpectedly. A
windfall tax is a targeted tax on unexpected gains that result from market
circumstances rather than any action taken by a firm or industry. It’s not a
tax on profits resulting from innovation, entrepreneurship or insightful
business decisions.
An element of windfall exists in the banks’ overestimation of COVID-related
losses that didn’t eventuate, under investment in generating capacity in the
electricity industry, and Russia’s invasion of Ukraine causing oil shortages.
Theoretically, a windfall profit is more than what is normally required to
reward shareholders for their investment, and more than what a company would
need to be encouraged to invest in technology and innovation.
Windfall taxes are on “excess profits”. They’re also not something that can be
predicted and therefore incorporated in regulation."
Cheers,
*** Xanni ***
--
mailto:xanni@xanadu.net Andrew Pam
http://xanadu.com.au/ Chief Scientist, Xanadu
https://glasswings.com.au/ Partner, Glass Wings
https://sericyb.com.au/ Manager, Serious Cybernetics
