Question

A farmer owns several acres of land known as Tysons Corner, Virginia. The land is used to produce agricultural products and is worth little. Suddenly the I-495 Beltway is build right next to the property and the value of the land skyrockets as developers contemplate developing a major shopping center known as Tyson's Corner Shopping Mall. Should the farmer be allowed to make a 100 fold profit on his property by selling it to developers. Do unexpected windfall profits serve any useful function in an economy or should these profits always be taxed?

Answer 1

Yes the farmer should allow to make a profit. Because he want to sell his property not the others. If government don't have any issue then he can sell his property. Unexpected windfall serve a function that for an individual, a windfall profit might in a result in a sudden boost in their income beyond what they could have reasonably expected. This is different from corporation profit. In corporation the profit reach to many others but here only individual get all the profits

It should be taxed. A windfall tax is a tax which government earn for excess profit. The reason behind it the government wants to redistribute the excess profit from few people to many peoples.