![]() The Windfall Profit Tax also imposes a significant paperwork burden on the federal government. The paperwork burden of the WPT is particularly onerous now because of the severe price collapse in 1986, which has threatened the ability of many oil-producing firms to stay in business. The American Petroleum Institute estimates that the industry's paperwork costs are about $100 million per year. Nevertheless, continuing reporting requirements under the Windfall Profit Tax still impose a heavy cost burden on the oil industry. ''Windfall profits,'' as measured by the tax, disappeared in 1986, and WPT liabilities have been virtually zero since then. Although oil prices had been expected to rise in subsequent years, they declined sharply. more ยป The Windfall Profit Tax was expected to collect large amounts of money and, in fact, did bring in revenues of more than $25 billion during the peak year of 1981. Contrary to expectations, oil prices fell rather than increased. The tax was intended to collect the ''windfall'' that would accrue to oil producers when the price of oil was deregulated and allowed to move to the higher world market price. Oil prices were expected to rise at rapid rates following decontrol. Average prices for domestic oil in 1980 under the price control system were about $24 per barrel, whereas world market prices were about $34 per barrel. ![]() The Windfall Profit Tax (WPT) was enacted in 1980 at the same time as the enactment of phased decontrol of domestic oil prices. ![]()
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