Excess profits taxes are taxes on profits that government decides for itself is too much. They were first tried in the US by individual states during our Civil War. They went national under Progressive governments during WWI and WWII and were not repealed until after WWII. Another Democratic administration revived them for the Korean War, and that one disappeared at the end of 1953—over 60 years ago.
Now another Progressive President, Barack Obama, wants to revive it, and without even war as justification: he just wants the money because he Knows Better the use of that money than do those companies that actually earned it. Under his 2016 Budget Proposal, Obama insists that companies
would be subject to a 14% tax on up to $2 trillion of overseas earnings they have already accumulated[.]
Obama claims he wants “more revenue” from our multinationals in order to help pay for infrastructure—you remember, all those shovel ready jobs he joked about not being so shovel ready after all.
Companies accumulate profits—earnings—for a number of reasons: saving for economic disaster or industry downturn, planned very expensive capital expansion, planned very expensive R&D, planned…whatever. They also simply hold onto funds during economic or regulatory climates that make it infeasible to spend the money.
The reasons, though, are none of the government’s business. Government has no place dictating to a private company what its purpose is in accumulating and retaining earnings. This impropriety plainly includes saying to a business, “You have too much cash on hand. Give it up.”
Here’s an alternative, albeit one inconceivable to Democrats: get more revenue from our multinationals, and get more revenue from our domestic companies and from us citizens, by cutting tax rates, reducing regulation, generally getting government out of our way. The resulting growing economic activity will generate lots more total revenue for government. Especially when tax reform makes it useful for companies to bring home the trillions of dollars they’re holding overseas.
They’re still holding all those trillions, after all, because there are no viable projects there, either, on which to spend the money.