Can governments regulate how much profit margin companies can have?

Question

I keep seeing comments about how companies are having record profits, and consumers are paying for inflationary prices. Can governments regualte profit margins as a form of consumer protection?

In: 0

Answer 1

Yes, they can. They would generally do it through a windfall profits tax.

They may also use progressive corporate taxes to encourage companies to keep their profits lower by investing their profits rather than keeping them/distributing them to stockholders.