Windfall profits tax

Germany Sets Windfall Tax at 90% for Clean Power Generators
Germany has set out its plan to claw back 90% of the earnings from some clean power generators as the government seeks funding for its consumer aid package.

The government is planning to skim earnings above €130 a megawatt-hour for solar, wind and nuclear, according to a draft law seen by Bloomberg News. Politicians are trying to reclaim some of the profits that companies like RWE AG are making from high power prices.

The windfall tax will be applied to electricity producers based on the fuel they use. Lignite plants will be taxed on earnings above €82 a megawatt hour and oil plants above €280. The measures will apply for 10 months, backdated to start of September 2022, until end June 2023 and could be extended to end of 2024.



Gotta love a backdated tax - NOT.

If I were the one being taxed, I’d be pretty pi$$ed that I did not have an opportunity to act strategically to minimize this tax.



Is this the perfect way to suppress development of additional production when the market price suggests a shortage?



Econ is a cleaner messy set of theories. But locally the power producers will produce. If the taxes are higher the tools need to be more efficient. What is not discussed are tax deductions for R&D and new plant expenses. I do not know if there are more specific deduction but if the tax rate is 90% and your engineers believe they can get a greater efficiency out of R&D or a new plant the company will invest to avoid taxes. The return is improved.

That econ theory is also proven.

While low supply side taxes meant no reason to reinvest. After all reinvestment came more so out of the profits. Not so good.

Supply side econ with very little private sector reinvestment translated into $31 trillion in federal debt in the US. Yet people without clue thought that was working. Just cut welfare and all will be well, dumb.

It isn’t so dumb if welfare for the wealthy is eliminated…

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That was never suggested. Instead making sure baby formula was denied was touted as kindness and hope for all.