http://www.kenniffonline.com/windfall-profits-tax/
What is a windfall… or maybe windfall profits tax… or windfall taxes…?
for a presidential debate im doing in english on the upcoming election, i’ve been researching both sides. obama says that he wants to pass a windfall profits tax to provide a $1000 emergency energy rebate…
so what is that?
*plz no election opinions.. i just want to know what the word means*
thanks in advance!
Alex did a great job on supply and demand, and you need to know that to understand windfall profits. The idea behind windfall profits comes from Alex’s second point about elasticity. Some products (such as gas) are inelastic, whether in the short or long run. Gasoline tends to be short term inelastic, as people do not change their habits quickly (it takes a while to start conserving). When that happens, if gas prices go up, demand does not go down immediately – which means that for a period of time, the producer of the inelastic product gets higher profits (sells the same amount at higher price) – thus finding a windfall (this goes back to the idea that you can pick apples or other fruit two ways – climb the tree and pick em by hand or wait for the wind to cause them to fall – windfall or easy pickings).
The idea/philosophy behind a windfall tax is that companies should not take advantage of the inelasticity of demand and when they do, they should be taxed to reduce the windfall (the easy pickings). Not all folks believe that windfall taxes, etc. are good and not all folks believe windfall profits are good. Take your pick.
Senate Republicans Block Windfall Profits Tax