'Empire-Building,' Underinvestment and Capital Gain Taxation

University of Bridgeport Working Paper

Posted: 15 Jan 2010 Last revised: 8 Jul 2010

Date Written: January 10, 2009


This note provides an explanation for why tax rates on capital gains are usually lower than ordinary income tax rates based on manager's agency problem related to "empire-building" and the underinvestment problem.

Keywords: capital gains tax, moral hazard, underinvestment, empire-building

JEL Classification: D86, G35, H24, H32, J33

Suggested Citation

Miglo, Anton, 'Empire-Building,' Underinvestment and Capital Gain Taxation (January 10, 2009). University of Bridgeport Working Paper, Available at SSRN: https://ssrn.com/abstract=1536679

Anton Miglo (Contact Author)

University of Salford ( email )

Salford, Greater Manchester M5 4WT
United Kingdom

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