Allison Christians and Tarcisio Diniz Magalhaes: The Case for a Sustainable Excess Profits Tax (March 24, 2021)

Allison Christians and Tarcisio Diniz Magalhaes, of McGill University – Faculty of Law and University of Antwerp – Faculty of Law, have made available for download their article, The Case for a Sustainable Excess Profits Tax, published in SSRN. The abstract is as followed:

Taxes designed to counter unsustainable behaviours that lead to environmental destruction are usually styled as surtaxes on purchase prices. It makes more sense to locate the source of the profits derived from such behaviours and tax them in order to internalize the environmental costs that are currently externalized to current and future societies. Since profit extracted by externalizing environmental risks constitutes economic rent, it could be taxed at high rates without creating inefficiencies. We propose a method for doing so in the form of a “sustainable excess profits tax”—a SEP tax. The tax base of a SEP tax can be constructed by using life cycle analysis methods to identify the portion of corporate profit that is attributable to the externalized environmental costs of production and distribution at all stages of supply chains. We establish the core elements of a SEP tax, demonstrate its theoretical justification, and examine its practical feasibility.

To see the full article, click: The Case for a Sustainable Excess Profits Tax by Allison Christians and Tarcisio Diniz Magalhaes

Posted by Jessica Ji, Associate Editor, Wealth Strategies Journal.

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