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Has the Time Come for Excess Profit Taxes?

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  • Shafik Hebous

Abstract

Excess profit taxes (EPTs) emerge as an option to contribute to the extra needed revenues, avoiding a general increase in corporate tax rates, while having the prospect to serve as a gateway to converge toward a permanent efficient rent tax in lieu of the corporate income tax. General unilateral (temporary or permanent) EPTs would face the same international pressures from profit shifting and tax competition as the existing corporate income tax, calling for international coordination. A coordinated EPT on multinational enterprises can take the form of a formulary apportionment approach that allocates the EPT base using sales by destination..

Suggested Citation

  • Shafik Hebous, 2023. "Has the Time Come for Excess Profit Taxes?," EconPol Policy Brief 49, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    • Handle: RePEc:ces:econpb:_49
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    References listed on IDEAS

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    1. Boadway, Robin & Bruce, Neil, 1984. "A general proposition on the design of a neutral business tax," Journal of Public Economics, Elsevier, vol. 24(2), pages 231-239, July.
    2. Mr. Shafik Hebous & Dinar Prihardini & Nate Vernon-Lin, 2022. "Excess Profit Taxes: Historical Perspective and Contemporary Relevance," IMF Working Papers 2022/187, International Monetary Fund.
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    Cited by:

    1. Nálepová, Veronika & Lampart, Marek, 2024. "Impact of windfall tax on market dynamics: A Cournot oligopoly model with exogenous shocks," Economic Modelling, Elsevier, vol. 137(C).

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