![]() The same type of excess profits tax was used by the US during World War II with rates as high as 95% (but the overall combined regular corporate tax and excess profits tax could not be higher than 80%), and this tax was retained until the Korean War in the 1950s.ĭuring the 1930s, the Roosevelt administration decided to use the corporate tax to curb the power of corporations permanently. Similar excess profit or windfall profit taxes were enacted in other belligerent countries like the United Kingdom, France, and Germany. The war profits tax was levied on corporate profits above a three-year pre-war average, and its top rate could be as high as 80%. In addition, from 1917 onward a series of excess profits and war profits taxes were imposed on corporations that profited from the war. During World War I, income tax rates were raised dramatically to finance the war effort, and this included the corporate tax rate, which was raised to 12%. In addition, corporate tax returns were to be public, to expose their immense profitability to the voters.Ĭorporate lobbying soon eliminated the publicity of corporate tax returns, but the corporate tax itself proved more resilient. The point was to force corporations to disclose their business activity and therefore make them easier to regulate through antitrust enforcement. ![]() ![]() Because the purpose of the tax was to regulate rather than to raise revenue or redistribute income, the initial corporate tax rate was a flat 1%. The corporate tax was part of the same antitrust campaign that culminated in 1911 with the Supreme Court ordering the breakup of Standard Oil. When the United States enacted its first corporate income tax in 1909, the main purpose was to regulate corporate power, especially that of the major monopolies such as J.P. A steeply progressive version of the same tax would reduce the economic and political power of monopolists and reintroduce competition in an economy increasingly burdened by rent extraction. ![]() The “Tax and monopoly” issue is co-published with the Balanced Economy Project and Roosevelt Institute.Ĭorporate income tax in the United States was originally introduced as an antitrust measure. Each edition features articles from prominent experts and academics from around the world. The following article is from the “Tax and Monopoly” October 2022 issue of the Tax Justice Focus, an online magazine that explores boundary-pushing ideas in tax justice and revolutionary solutions to the most pressing challenges of our time. ![]()
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