Excess Profits Taxation and the Taxpayer

Excess profits taxation goes hand in hand with warfare.It need not be stressed that war requires great sums of money.As the Marshal de Trivulce said when Louis XIV asked him what he needed to make war-"Money, more money, and always money."Governments tap every available source of revenue in times of stress; what is more logical than a special levy on profits considered to be derived either directly or indirectly from the war effort.Moral considerations in establishing excess profits taxation are also very great; in fact, they tend to dwarf the revenue aspect in most wartime discussions.In setting up an excess profits tax the emphasis is on "taking the profits out of war."The record has been generally one of hasty enactment, followed by revision in more or less substantial decree.The record of World War I illustrates the popularity of the excess profits tax idea.Denmark and Sweden started the ball rolling in 1915 when they aimed a tax at the huge profits made on the shipment of goods into Germany.Within a year's time, seventeen countries had excess profits taxes on the books.Significantly, all these countries dropped this form of taxation from their fiscal systems when the war period terminated. World War I ExperienceSacrifice and patriotism dominate the entire nation when we take up arms.