Gray Panthers of San Francisco
January 2006 Newsletter

What Is An Excess Profits Tax?


What Is an Excess (War) Profits Tax?

An excess profits tax is based on the belief that there should be no profit from war. War profits come out of our tax dollars. Any excess profit from corporate war contracts should be heavily taxed and those resources placed back into social programs for people.

The excess profits tax is calculated by two methods: 1) as any return of capital over a fixed percent, or 2) as net income in excess of prewar profit levels.

Origin of the Excess Tax

As far back as the Civil War, public outrage against war profits resulted in the enactment of an excess profits tax. In 1917 the US federal government adopted a tax, which continued and increased until 1921. The excess tax with rates as high as 90% was enacted by federal legislation during World Wars I and II and the Korean War. Great Britain levied an excess profits tax from 1915 to 1921, with a rate varying from 40% to 80%. During the era of World War II, Britain’s excess profits tax was revived, with rates increased to 100%.

Out of our Pockets!

War debts are passed down to succeeding generations.
War debt $226,017,245,885
State debt $28,592,380,487
San Francisco debt $760,681,550

The restoration of the excess profits tax would break the cycle of our national, state and city debt crises.

To quote Sen. McGovern, February 2003, “I don’t think people ought to be making money out of young American blood in Iraq.” We would add, nor out of the blood of thousands of Iraqi women, children and men.

(back to January 2006 Newsletter front page)