It has been defined and redefined in every windfall profits tax law. It is roughly defined as profiteering, that is increasing prices above your historical rates benefiting from outside actions that you did not cause. Examples are after a natural disaster or during a war period raising rates to make higher profits. Almost every state has anti profiteering laws but only the feds can impose a penalty nationally.

Economists have long held a 4-10% net profit is sustainable. But quite simply lets look at the historical averages for that company and anything 5 % above that is excess.

@glennlab But what is the profit margin now? Surely it is above that 4-10% profit for a lot of corporations.

@Redheadedgammy I haven't studied corporate balance sheets in a long time, and the accounting tricks they use to disguise their actual profits. There is no easy way to asses it without looking at each company's 10K. Since I no longer charge for investment advice, I am a little rusty.

Reagan declined to repeal the tax in spite of running on that because of the amount of revenue it generated in the 1980s.

@glennlab I wish I better understood how they get away with all the Shenanigans that they pull to hide their profits!!

@Redheadedgammy lobbyists and $$$, a million heree and there yields extra billions in shielded profits. They get to write off 17% of their purchases just because. (depletion).