WASHINGTON, March 25 – With working families across the country increasingly bearing the brunt of growing economic pain and inequality – amidst the conflict in Ukraine, the ongoing coronavirus pandemic, and spiking prices of critical necessities – Sen. Bernie Sanders (I-Vt.) on Friday introduced legislation in the Senate that would impose a 95 percent windfall tax on the excess profits of major companies. A temporary emergency measure, Sanders’ Ending Corporate Greed Act could raise an estimated $400 billion in one year from 30 of the largest corporations alone and would apply only in 2022, 2023, and 2024.
Sen. Ed Markey (D-Mass.) is cosponsoring the legislation in the Senate, and Rep. Jamaal Bowman (D-N.Y.) will introduce companion legislation in the House of Representatives.
This would not be the first time the United States implemented a windfall profits tax. Sanders’ legislation is modelled after the broad-based windfall profits tax implemented by the U.S. during the first and second World Wars and the Korean War. During World War II, the tax rate reached as high as 95 percent, which ensured that companies could not profiteer off the war. The U.S. also enacted a windfall profits tax on oil and gas companies as recently as the mid-1980s.
“The American people are sick and tired of the unprecedented corporate greed that exists all over this country. They are sick and tired of being ripped-off by corporations making record-breaking profits while working families are forced to pay outrageously high prices for gas, rent, food, and prescription drugs,” said Sen. Sanders. “We cannot allow big oil companies and other large, profitable corporations to continue to use the war in Ukraine, the COVID-19 pandemic, and the specter of inflation to make obscene profits by price gouging Americans at the gas pump, the grocery store, or any other sector of our economy. During these troubling times, the working class cannot bear the brunt of this economic crisis, while corporate CEOs, wealthy shareholders, and the billionaire class make out like bandits. The time has come for Congress to work for working families and demand that large, profitable corporations make a little bit less money and pay their fair share of taxes.”
“My constituents are hurting, and they are rightly asking what Congress can do about surging prices for food, energy, and other necessities,” said Rep. Bowman. “What we cannot do is ask working Americans to shoulder any more of this burden. Corporate price-gouging is playing a big role in the inflation we are experiencing right now, putting families in a financial squeeze in the middle of an ongoing pandemic. These are the same corporations that are eroding our democracy, eviscerating workers’ rights, and fueling the climate crisis — and it is time to make them pay. The Ending Corporate Greed Act will take away any incentive for large companies to exploit our current crisis for profit, and it will protect workers, families, and small businesses in New York and across the country. Our country has successfully used windfall profits taxes in the past, and I look forward to working with Senator Sanders to pass this bill as soon as possible.”
“Oil companies are raking in record profits, while Americans are facing price hikes at the pump,” said Sen. Markey. “Something is fundamentally broken when the biggest corporations in the country are leveraging a pandemic and a war to pad their profit margins as average Americans suffer. That is why I am co-sponsoring Senator Sanders’ Ending Corporate Greed Act to protect consumers from profiteering and stand against economic inequality.”
If signed into law, Sanders’ Ending Corporate Greed Act would:
- Maintain the existing 21 percent corporate tax on a company’s profit equal to or less than pre-pandemic levels.
- Establish a 95 percent windfall profits tax on a company’s profits that are in excess of their average profit level from 2015-2019, adjusted for inflation.
- Apply only to large companies with $500 million or more in revenue annually.
- Be limited to 75 percent of income in the current year.
- Be a temporary emergency measure, applying only in 2022, 2023, and 2024.
Under this legislation, even with the 95 percent windfall profits tax, companies would still be able to make a reasonable profit compared to previous years. Additionally, as the tax is on profit, not revenue, companies that raise prices for legitimate reasons related to rising expenses would not be penalized. However, companies that have chosen to raise prices in the pursuit of obscene profiteering, to further enrich their CEOs and wealthy shareholders, would pay a tax of up to 95 percent on their windfall profits. For example:
- Chevron’s average profit between 2015-2019 was $7.6 billion. In 2021, Chevron’s profit skyrocketed to $21.6 billion. If the windfall profits tax had been in place in 2021, Chevron would have paid an additional $12.9 billion in taxes and would still maintain $8.7 billion in profits. While Chevron’s revenues increased by 84 percent from 2020 to 2021, oil prices for the average consumer doubled and the price of natural gas tripled. At the same time, Chevron engaged in $1.4 billion in stock buybacks and spent $500 million more on shareholder dividends than it did in 2020.
- JP Morgan Chase’s average profit between 2015-2019 was $37.4 billion, but its 2021 profit was $59.6 billion. If the windfall profits tax had been in place in 2021, it would have paid an additional $18.8 billion in taxes and still would have maintained $40.8 billion in profits.
This legislation has been endorsed by: the Economic Policy Institute, American Economic Liberties Project, Groundwork Action, Sunrise Movement, Friends of the Earth, Food & Water Watch, and Center for Biological Diversity. Numerous scholars and policy experts have also voiced support for the windfall profits tax as a strong measure to fight inflation and limit corporate profiteering, including tax scholar Reuven Avi-Yonah, economists Emmanuel Saez and Gabriel Zucman, and Economic Policy Institute economist Josh Bivens.
Read the summary, here.
Read the fact sheet and statements of support, here.
Read the bill text, here.