Do tax cuts encourage rent seeking by top corporate executives ? theory and evidence Dana C. Andersen and Ramón López
By: Andersen, Dana C
.
Contributor(s): López, Ramón.
Material type: 
ArticlePublisher: 2019Subject(s): GESTORES | EMPRESAS | IMPUESTOS | INCENTIVOS FISCALES | REDUCCIONES TRIBUTARIAS | MODELOS ECONOMETRICOS
In:
Contemporary Economic Policy v. 37, n. 2, April 2019, p. 219-235Summary: This paper explores the role of tax policy in shaping incentives for executive effort (labor supply) and rent seeking within the firm. We develop a theoretical model that distinguishes between effort and rent‐seeking responses to income taxes, and provides a framework to estimate a lower bound for the rent‐seeking response. Using executive compensation and governance data, we find that rent seeking represents an important component of the response to changes in tax rates, especially among executives in firms with the worst corporate governance.
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| OP 1634/2018/4-1 Growth and variability os school district income tax revenues | OP 1634/2019/1 Contemporary Economic Policy | OP 1634/2019/2 Contemporary Economic Policy | OP 1634/2019/2-1 Do tax cuts encourage rent seeking by top corporate executives ? | OP 1634/2019/2-2 How do minimum wage adjustments affect wages in China | OP 1634/2019/2-3 Structural change through public education expenditure | OP 1634/2019/3 Contemporary Economic Policy |
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Resumen.
Bibliografía.
This paper explores the role of tax policy in shaping incentives for executive effort (labor supply) and rent seeking within the firm. We develop a theoretical model that distinguishes between effort and rent‐seeking responses to income taxes, and provides a framework to estimate a lower bound for the rent‐seeking response. Using executive compensation and governance data, we find that rent seeking represents an important component of the response to changes in tax rates, especially among executives in firms with the worst corporate governance.
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