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windfall profits tax
Bowman, Sanders Propose 95% Tax on Corporations Exploiting Inflation to Jack Up Prices
"Enough is enough," said Sen. Bernie Sanders. "We cannot continue to allow large corporations to make obscene profits by price gouging Americans in virtually every sector of our economy."
Jun 21, 2024
Rep. Jamaal Bowman and Sen. Bernie Sanders on Friday led a group of progressive lawmakers in announcing legislation that would penalize large corporations with a 95% windfall profits tax for using elevated inflation as a pretext to hike prices and pad their bottom lines.
The
Ending Corporate Greed Act would "establish a 95% windfall profits tax on a company's profits that are in excess of their average profit level from 2015-2019, adjusted for inflation," according to a summary of the measure.
The bill would keep intact the 21% statutory corporate tax rate for profits equal to or lower than they were prior to the coronavirus pandemic. The 95% tax on windfall profits would be limited to companies with $500 million or more in annual revenue and would be temporary, running only through 2026.
Bowman (D-N.Y.), whose primary contest against AIPAC-backed George Latimer is in on Tuesday, introduced the bill in the House on Friday alongside several original cosponsors. Sanders and Sen. Ed Markey (D-Mass.) are expected to introduce companion legislation in the Senate in the near future.
"The American people are sick and tired of being ripped off by large corporations that continue to make record-breaking profits by charging outrageously high prices for gas, rent, food, and prescription drugs, " Sanders said in a statement.
"Enough is enough," he continued. "We cannot continue to allow large corporations to make obscene profits by price gouging Americans in virtually every sector of our economy. If corporate CEOs and their masters on Wall Street will not end their greed, we must end it for them. It is time for Congress to enact a windfall profits tax."
The bill's authors estimate that had the proposed 95% windfall tax been in place last year—when U.S. corporate profits surged to a record high—the federal government would have raised $300 billion in additional revenue from 10 large companies alone.
"Since the pandemic, corporations have remained incredibly selfish in their business practices, squeezing their consumers who rely on them for essential goods and services, including gas, food, prescription drugs, banking, and more," Bowman said Friday. "Congress must do its part to check corporate greed before it completely robs people in America of their ability to live a life in pursuit of liberty, justice, and happiness."
2023 Profits Above Pre-Pandemic Average:
⬆️444%: Amazon
⬆️325%: Marathon Petroleum
⬆️289%: Chevron
⬆️202%: Berkshire Hathaway
⬆️195%: Google
⬆️193%: Centene
⬆️190%: Microsoft
⬆️165%: Exxon Mobil
⬆️165%: Facebook
⬆️111%: Lowe's
⬆️108%: UnitedHealth
We need a windfall profits tax. pic.twitter.com/E4ocyfzdRT
— Warren Gunnels (@GunnelsWarren) June 21, 2024
Companies haven't been shy about using elevated prices across the U.S. economy as a justification for hiking prices on their products.
As Lindsay Owens, executive director of the Groundwork Collaborative, noted in a New York Timesop-ed in 2022: "Executives on their earnings calls crowed to investors about their blockbuster quarterly profits. One credited his company’s 'successful pricing strategies.' Another patted his team on the back for a 'marvelous job in driving price.' These executives weren't just passing along their rising costs; they were going for more. Or as one CFO put it, they were 'not leaving any pricing on the table.'"
A recent Groundwork analysis estimated that between April and September 2023, corporate profits fueled more than half of U.S. inflation. Economists with the International Monetary Fund came to a similar conclusion last year about price increases in Europe, blaming "rising corporate profits" for "almost half the increase in Europe's inflation over the past two years."
The new bill's sponsors pointed to examples of major corporations across a range of sectors reaping massive windfall profits last year amid high inflation, including Amazon, which reported $37.6 billion in 2023 profits—a staggering 444% increase compared to the company's average profit between 2015 and 2019.
Amazon, a notorious tax avoider, would have paid an estimated $19.1 billion in windfall taxes if the Ending Corporate Greed Act was in place last year.
"Corporate greed and unconscionable price gouging have resulted in Americans paying more for basic necessities such as gas and groceries," Markey said Friday. "The Ending Corporate Greed Act penalizes large corporations raking in record profits while everyday Americans and workers pay the price."
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Congress Urged to Tax Big Oil for Price Fixing and 'Issue Every American a Refund'
The Groundwork Collaborative's leader also said that "the Department of Justice should criminally prosecute Scott Sheffield," the former Pioneer CEO whom the FTC blocked from joining ExxonMobil's board.
May 07, 2024
Groundwork Collaborative executive director Lindsay Owens on Tuesday responded to U.S. government allegations of fossil fuel industry price fixing with calls for federal prosecution and congressional action to return money to the American public.
"Americans have been working harder and harder to cover rising energy costs, with the understanding that supply chain snags and geopolitical forces were keeping prices high," Owens said. "Now the Federal Trade Commission has uncovered the real source behind the price at the pump: collusion."
"The Department of Justice should criminally prosecute Scott Sheffield and Congress should tax back the industry's windfall profits and issue every American a refund," she added, referring to Pioneer Natural Resources' founder and longtime CEO.
Owens' statement came after members of the Federal Trade Commission (FTC) declined to contest ExxonMobil's controversial $64.5 billion acquisition of Pioneer—which was completed Friday—but approved a consent order barring Sheffield from serving on Exxon's board of directors or as an adviser to the fossil fuel giant.
"This complaint is a wake-up call about the dangerous consolidation of Big Oil's economic and political power."
The FTC voted 3-2 to accept the order and place related documents on the record for public comment. Citing communications including in-person meetings, public statements, text messages, and WhatsApp conversations, a commission complaint accuses Sheffield of trying to collude with the representatives of the Organization of Petroleum Exporting Countries (OPEC) and OPEC+.
"Mr. Sheffield's past conduct makes it crystal clear that he should be nowhere near Exxon's boardroom. American consumers shouldn't pay unfair prices at the pump simply to pad a corporate executive's pocketbook," said Kyle Mach, deputy director of the FTC's Bureau of Competition. "The FTC will remain vigilant in its enforcement efforts to protect competition in these vital markets."
Pioneer toldFortune that the company and its founder "believe that the FTC's complaint reflects a fundamental misunderstanding of the U.S. and global oil markets and misreads the nature and intent of Mr. Sheffield's actions," but neither party would take "any steps to prevent the merger from closing."
ExxonMobil "learned of the FTC's allegations regarding Sheffield from the agency and said in a statement that they are 'entirely inconsistent with how we do business,'" according to Fortune. "Exxon has agreed to the terms of the consent decree," which also "prohibits the oil giant from appointing any Pioneer employee or director to its board for five years."
Still, since the FTC's allegations were initially reported by The Wall Street Journal last week and then confirmed with the complaint's release, demands for additional action by the U.S. Department of Justice (DOJ) and Congress have mounted.
Cassidy DiPaola, Fossil Free Media's director of communications, on Monday called the complaint "explosive" and said that Democrats "must respond with bold action to hold this rogue industry accountable," including:
- Aggressive congressional and DOJ investigations into the full extent of Big Oil's price fixing;
- A windfall profits tax to claw back ill-gotten gains; and
- End taxpayer subsidies for oil and gas.
"But accountability is just the first step. This complaint is a wake-up call about the dangerous consolidation of Big Oil's economic and political power. We can't let them use megamergers to entrench their control and crush clean energy competition," she stressed. "Ultimately, this is about the future we choose: One where we remain at the mercy of Big Oil's greed and destruction, or one where clean, democratically controlled energy powers our communities. It's time to make the right choice."
In response to the Journal's reporting, Tyson Slocum, director of Public Citizen's Energy Program, similarly said that "Congress must immediately hold hearings on Big Oil's alleged collusion with OPEC to raise gasoline prices for Americans."
"Congress must not only investigate Pioneer's alleged role in conspiring with OPEC, but whether there existed a broader conspiracy by U.S. oil companies to collude with OPEC nations," he argued. "Big Oil must be held accountable for any conspiracy by or among American oil companies and OPEC members."
The reporting was notably published on the same day as the U.S. Senate Budget Committee's hearing about a nearly three-year investigation into fossil fuel companies and trade groups' decadeslong "campaign of deception and distraction," which has evolved from denying the planet-heating impact of their products to pretending to be part of the solution to the climate emergency.
"The joint report and documents we discovered show how, time and again, the biggest oil and gas corporations say one thing for the purposes of public consumption but do something completely different to protect their profits," Rep. Jamie Raskin (D-Md.), the ranking member on the House Oversight Committee, testified during the hearing. "Company officials will admit the terrifying reality of their business model behind closed doors but say something entirely different, false, and soothing to the public."
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Corporate Windfall Profits Surge to $1 Trillion a Year as Working People Suffer
"Big business is gaslighting us all—they're hiking prices to make monster profits, plundering people under the cover of a polycrisis."
Jul 06, 2023
An analysis released Thursday shows that 722 of the world's top corporations made combined windfall profits of $1 trillion per year in 2021 and 2022 as people across the planet struggled to meet basic needs due to the price hikes that businesses have used to pad their bottom lines.
The humanitarian groups Oxfam and ActionAid found that the companies raked in $1.09 trillion in windfall profits—defined as profits significantly above a given corporation's average—in 2021 and $1.1 trillion last year.
That's an 89% increase in total profits compared to the average between 2017 and 2020, according to Oxfam and ActionAid's analysis of Forbes' "Global 2000" ranking of the world's largest companies—a major windfall during a period in which extreme poverty and global hunger surged.
The two groups found that "45 energy corporations made on average $237 billion a year in windfall profits in 2021 and 2022" while "food and beverage corporations, banks, Big Pharma, and major retailers also cashed in on the cost-of-living crisis that has seen more than a quarter of a billion people in 58 countries hit by acute food insecurity in 2022."
The windfall profits of leading food and beverage companies in 2021 and 2022 would be "enough to cover the $6.4 billion funding gap needed to deliver life-saving food assistance in East Africa more than twice over," Oxfam and ActionAid noted.
"People are sick and tired of corporate greed," Amitabh Behar, Oxfam's interim executive director, said in a statement. "It's obscene that corporations have raked in billions of dollars in extraordinary windfall profits while people everywhere are struggling to afford enough food or basics like medicine and heating."
"Big business is gaslighting us all—they're hiking prices to make monster profits, plundering people under the cover of a polycrisis," Behar added.
"Government policy should not allow mega-corporations and billionaires to profiteer from people's pain."
Even the International Monetary Fund (IMF) recently conceded that corporate profiteering has been a major contributor to price increases that have fueled cost-of-living crises worldwide. Last month, IMF economists estimated that "rising corporate profits account for almost half the increase in Europe's inflation over the past two years as companies increased prices by more than spiking costs of imported energy."
Oxfam and ActionAid argued that governments should "claw back gains driven by profiteering" by imposing a 50-90% windfall tax on the profits of major corporations.
The groups said such a tax would generate hundreds of billions of dollars a year in revenue that could be used to lift people out of poverty, reduce hunger, slash energy bills, and support Global South nations on the frontlines of the climate crisis.
"Enough is enough," said Arthur Larok, secretary-general of ActionAid. "Government policy should not allow mega-corporations and billionaires to profiteer from people's pain. Governments must tax windfall profits of corporations across all sectors—and invest that money back in helping people and deterring future profiteering. They must put the interests of their great majorities ahead of the greed of a privileged few."
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