In terms of tax policy, the excess profit taxation is predominantly recognized as a wartime fiscal instrument designed to capture profits that exceed normal peacetime earnings. Nevertheless, excess profit taxation is also levied to prevent excessive profits in special circumstances other than wartime. United States in the 1980s and Bolivia and Venezuela in recent years have levied windfall profits taxes on oil and gas production.
In light of the US legislative history, this article proposes three points of analysis from a tax policy perspective: first, the justification addressed to impose the levy; second, its attributes of efficiency; and third, the revenues and its distributive effects. To that extent, four features are analyzed as fundamental aspects of which a modern windfall profits tax on the oil and gas industry is imposed nowadays.Intertax