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The last time a politician took on such a windfall was when former President George H.W. Bush went skydiving for his 90th birthday.
A few times in American history, when a certain sector’s profits have been deemed too high relative to the general economy, the federal government has instituted a “windfall tax” on certain industries.
In 1980, the government under former President Jimmy Carter implemented a windfall tax on crude oil on profits above its 1979 levels. Similarly, the U.K. recently announced a 25% windfall tax on oil and gas companies in May. (Barack Obama proposed a similar tax on the sector as a 2008 presidential candidate, but Obama didn’t actually enact one in office.)
The U.S. government also enacted more general corporate windfall taxes, irrespective of industry or sector, during World War I, World War II, and the Korean War.
Some on the left say the time is now for a similar initiative, particularly since the Covid-19 pandemic first hit in March 2020. For example, in 2021, average wages and salaries increased 4.5%, while corporate profits increased 25%.
The Ending Corporate Greed Act would institute a 95% tax on companies’ excess profits above their average level from 2015–19, adjusted for inflation. The tax would apply to companies with $500+ million in annual revenue, and only for the three years of 2022–24.
The Senate version was introduced on March 28 as S. 3933, by Sen. Bernie Sanders (I-VT). The House version was introduced a week and a half later on April 7 as H.R. 7443, by Rep. Jamaal Bowman (D-NY16).
Supporters argue that since 2020 in particular, the largest corporations and the common person have seen differing economic outcomes, which Congress has the potential to help.
“Since the start of this pandemic, corporations have remained incredibly selfish in their business practices, squeezing their consumers who rely on them for essential goods and services [such as] gas, food, prescription drugs, banking and more,” Rep. Bowman said in a press release. “Congress must do its part to check corporate greed before it completely robs people in America of their ability to live a life in pursuit of liberty, justice and happiness. As billionaires and corporations continue to get richer while the average person struggles to afford gas, food and utility costs, we must begin to hold those responsible to account.”
“We cannot allow big oil companies and other large, profitable corporations to continue to use [the COVID-19 pandemic] to make obscene profits by price gouging Americans at the gas pump, the grocery store, or any other sector of our economy,” Sen. Sanders said in a separate press release. “During these troubling times, the working class cannot bear the brunt of this economic crisis, while corporate CEOs, wealthy shareholders, and the billionaire class make out like bandits.”
Opponents counter that the bill is a feel-good measure which not only punishes success but may actually raise prices, as companies would hike prices to cover the surging taxes they’d owe.
“According to the Vermont socialist, inflation is the fault of large corporations and wasn’t caused by the hyper-stimulating government give-away programs of recent years,” Colorado Mesa University economics professor Kevin Cochrane wrote for the conservative publication American Thinker. “In what world does increasing corporate expenses (taxes) result in *lower *prices?”
Cochrane cited one specific company, among the legislative sponsors’ most frequent punching bags, as an example.
“In Sanders’s world, Amazon is profiteering because the company earned more income during the pandemic,” Cochrane continued. “Wait. They made more profit because they sold more — remember, things are sold by businesses for a profit. And they sold more during the Covid years because people shopped online from home.”
The House version has attracted four cosponsors, all Democrats. It awaits a potential vote in the House Ways and Means Committee.
Last updated Jun 6, 2022. View all GovTrack summaries.The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Apr 20, 2022.
Ending Corporate Greed Act
This bill imposes a tax through 2024 on certain corporations (corporations other than regulated investment companies, real estate investment trusts, or S corporations) that have average annual gross receipts for a three-year period of at least $500 million. The tax is 95% of what are deemed excess profits for a taxable year.
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