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What are Windfall Profits?

profits windfall
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What are Windfall Profits?

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They are profits which are realised where a subsidy or other financial incentive is granted for an investment that would have been made even if no incentive had been offered. This definition can be found in business dictionaries (such as the well-known Gabler) or even in the Brockhaus. Michael Blank (arguing from the vantage of the private sector) tries to obscure that connection when he defends windfall profits in his article in this issue. Their purpose is, he says, to “motivate [companies] to make an entrepreneurial commitment which they would not make without the back-up provided by the state.” That would be legitimate but is not what is called windfall profits. So it must be stated again: windfall profits can have no legitimacy in the context of development policy. Another issue of fundamental importance is that of isolated single projects. In a learning process of several decades, the actors of development policy have come to realise that isolated projects bring only temporary re

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Windfall profits are any type of additional income over expenses that is completely unexpected. In many countries, there are laws that specifically define windfall profit for the purpose of establishing the tax schedule that applies to the unanticipated additional revenue. For this reason, it is important for individuals and businesses to be clear on what is windfall profit and what constitutes a different class of revenue according to local tax laws. Part of understanding what constitutes a windfall profit situation is to consider some of the ways in which a sudden windfall may come about. When real estate holdings owned by an individual suddenly appreciate in value, the owner can sell the holdings at a substantial and unanticipated level of profit. An unexpected increase in sales that drains products that have been setting in warehouses for some time can also be interpreted as windfall profits. The key factor in any windfall situation is that there is no advance indicators that deman

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How have we taxed them in the past? How does Obama’s plan mesh with his overall energy agenda? Why windfall? The etymology of windfall is straightforward enough. Early American usage of windfall had to do with trees. King George laid claim to choice colonial trees in order to build ships for the Royal Navy. The tree grab angered the locals, but anything that blew over on its own was fair game for the Americans-a windfall. Windfall profits are business gains from unforeseen events. Through most of U.S. history, excess-profits taxes were primarily a wartime phenomenon. Excess-profits taxes show up in various forms during World War I, World War II, and the Korean War. Congress pitched the tax measures as a way to prevent profiteering by American companies that benefited from the massive wartime increase in government spending. Of course, the taxes also helped pay for the wars. Tax rates ranged from 20 percent to 95 percent of excess profits, and the wartime definition of excessive was fai

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