Excess Profits Tax

A special tax that is assessed upon income beyond a specified amount, usually in excess of a deemed "normal" income. Excess profit taxes are primarily imposed on some businesses during a time of war or other emergency, or beyond a certain amount of return on invested capital. Excess profits taxes are designed to generate emergency revenue for the government in time of crisis. The tax itself is imposed on the difference between the amount of profit that a company generally earns during peacetime and the profits earned during times of war.

These taxes are also intended to prevent astute businessmen from reaping inordinate profits from increased wartime governmental and consumer spending. Excess profits taxes were levied during both world wars, as well as the Korean War. This tax is not popular with free-enterprise thinkers, who feel that it discourages necessary wartime productivity with its removal of the profit motive.


Investment dictionary. . 2012.

Look at other dictionaries:

  • excess profits tax — Tax levied on profits which are beyond the normal profits of a business and generally imposed in times of national emergency such as war to discourage profiteering. The Internal Revenue Code also imposes a tax on corporations who accumulate an… …   Black's law dictionary

  • excess profits tax — Tax levied on profits which are beyond the normal profits of a business and generally imposed in times of national emergency such as war to discourage profiteering. The Internal Revenue Code also imposes a tax on corporations who accumulate an… …   Black's law dictionary

  • excess profits tax — noun A tax on profits in excess of those for a specified base period or over a rate adopted as a reasonable return on capital • • • Main Entry: ↑excess …   Useful english dictionary

  • Excess profits tax — An excess profits tax is a tax on any profit above a certain amount. A predominantly wartime fiscal instrument, the tax was designed primarily to capture wartime profits that exceeded normal peacetime profits.Fact|date=January 2007 In 1863 the… …   Wikipedia

  • excess-profits tax — /ek ses prof its/ a tax on the profits of a business enterprise in excess of the average profits for a number of base years, or of a specified rate of return on capital. [1910 15] * * * ▪ finance       a tax levied on profits in excess of a… …   Universalium

  • excess profits tax — Fin a tax levied by a government on a company that makes extraordinarily large profits in times of unusual circumstances, for example, during a war. An excess profits tax was imposed in the United States during World War II …   The ultimate business dictionary

  • excess profits tax — tax on the profits of a business enterprise in excess of the average profits for a number of base years, ept (Finance) …   English contemporary dictionary

  • excess-profits tax — noun : a tax imposed especially during war on business profits that are in excess of the average profits over a specified base period, of a specified rate of return on invested capital, or of a specified rate of return on certain military… …   Useful english dictionary

  • excess profits tax — /ˌekses prɒfɪts tæks/ noun a tax on profits which are higher than what is thought to be normal …   Dictionary of banking and finance

  • excess profits tax — A type of income tax based on net income in excess of a certain percentage of the taxpayer s invested capital and imposed at progressive rates. Greenport Basin & Constr. Co. v United States, 260 US 512, 67 L Ed 370, 43 S Ct 183. See invested… …   Ballentine's law dictionary

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