Who Bears the Cost of Taxing the Rich? An Empirical Study on CEO Pay
43 Pages Posted: 28 Feb 2018
Date Written: February 19, 2018
An increase in the top marginal tax rate by 10 percentage points raises gross CEO pay at the rm level by 12.0 %. CEOs use their bargaining power to shift their tax load partly to the employer. More powerful CEOs - measured in terms of their function or level of pay - are more successful in doing so. A higher taxation of CEO pay may thus not necessarily be the appropriate measure to reduce the increasing income inequality in the U.S. largely due to the rise of top executive compensation in large U.S. corporations.
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