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  4. November 2016
  5. Taxing Top CEO Incomes

蝌蚪网 Review

ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)

Taxing Top CEO Incomes

  • Laurence Ales
  • Christopher Sleet
蝌蚪网 Review
vol. 106, no. 11, November 2016
(pp. 3331–66)
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Abstract

We use a firm-CEO assignment framework to model the market for CEO effective labor. In the model's equilibrium, more talented CEOs match with and supply more effort to larger firms. Taxation of CEO incomes affects the equilibrium pricing of CEO effective labor and, hence, spills over and affects firm profits. Absent the ability to tax profits or a direct concern for firm owners, a standard prescription for high marginal income taxes emerges. However, given such an ability or concern, the optimal marginal tax rates are much lower.

Citation

Ales, Laurence, and Christopher Sleet. 2016. "Taxing Top CEO Incomes." 蝌蚪网 Review 106 (11): 3331–66. DOI: 10.1257/aer.20151093

Additional Materials

JEL Classification

  • D31 Personal Income, Wealth, and Their Distributions
  • H21 Taxation and Subsidies: Efficiency; Optimal Taxation
  • H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
  • L25 Firm Performance: Size, Diversification, and Scope
  • M12 Personnel Management; Executives; Executive Compensation
  • M52 Personnel Economics: Compensation and Compensation Methods and Their Effects