The Case for Taxing Away Unsustainable Profits

58 Pages Posted: 28 Mar 2021 Last revised: 12 Jul 2023

See all articles by Allison Christians

Allison Christians

McGill University - Faculty of Law

Tarcísio Diniz Magalhães

University of Antwerp Faculty of Law

Date Written: March 24, 2021


When businesses offload environmental and social costs on the public, the resulting profits are windfalls extracted from current and future taxpayers. Prevailing regulatory and tax remedies have not only failed to eliminate such profiteering, but they have in fact incentivized it. To prevent some from receiving windfalls while everyone else bears the costs, profits can be distinguished between sustainable profits, when costs are internalized, and unsustainable profits, when costs are externalized. While the former would remain subject to the traditional corporate income tax, the latter should be completely taxed away with a surtax. A viable way to achieve this is to combine advanced mechanisms for measuring environmental and social damage across supply chains with classic and emerging legal techniques for differentiating categories of income for tax purposes. Mobilized through the income tax system, these tools can be used to design a cutting-edge windfall tax on unsustainable profits. This Article makes the normative and practical case for doing so.

Keywords: taxation, life-cycle assessment, environmental externalities, economic rent, windfalls, cost savings, carbon pricing, pandemic, COVID-19

JEL Classification: D63, D78, E62, F23, F42, H20, H25, H87, K33, K34, O19, O34, O38

Suggested Citation

Christians, Allison and Diniz Magalhães, Tarcísio, The Case for Taxing Away Unsustainable Profits (March 24, 2021). George Washington Law Review, Vol. 91, No. 3 (June 2023), Available at SSRN: or

Allison Christians

McGill University - Faculty of Law ( email )

3644 Peel Street
Montreal H3A 1W9, Quebec

Tarcísio Diniz Magalhães (Contact Author)

University of Antwerp Faculty of Law ( email )

Stadscampus, Venusstraat 23, Office S.V.255
Antwerp, 2000

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