Effects of Taxation: On Executives

Effects of Taxation: On Executives

Effects of Taxation: On Executives

Effects of Taxation: On Executives

Excerpt

The purpose of this volume in the general series on the effects of taxation on business is to trace those results which are realized in the behavior of the business executive in his various individual activities. That taxation may have some of its most far-reaching effects in the sphere of executive activities is a natural consequence of the important role of the executive and the very high tax rates to which many of them are subjected. But the apparent obviousness of many of the popular generalizations about the repressive effects of taxation on executive incentives is not borne out when it comes to detailed analysis of the influence of taxation on the output and direction of executive energies. The initial generalization that taxation does have, or at least is likely to have, important effects on executive behavior has been confirmed. But it is difficult, if not impossible, to find convincing evidence to support many of the more usual statements as to what precisely these consequences are. Popular statements of the deleterious effects of heavy taxation, like many other such generalizations, are likely to be untrue in proportion as their application is more widely extended.

There is considerable analogy between the difficulties of tracing the effects of taxes upon executive behavior and those of determining the incidence of taxation in the financial sense, the problem of tracing who ultimately pays the taxes; but the former is probably even more elusive and metaphysical than the latter. The normal way of passing on tax burdens to others is in the shape of prices computed to include taxes. There is some limitation upon this process in the fact that it requires, in some degree at any rate, the consent of other par-

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