'Empire-Building', Underinvestment and Capital Gain Taxation

Journal of Current Issues in Finance, Business and Economics, Vol. 2, No. 4, 2010

Posted: 15 Jan 2010 Last revised: 31 Aug 2010

Date Written: July 10, 2009

Abstract

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 (July 10, 2009). Journal of Current Issues in Finance, Business and Economics, Vol. 2, No. 4, 2010, Available at SSRN: https://ssrn.com/abstract=1536686

Anton Miglo (Contact Author)

University of Salford ( email )

Salford, Greater Manchester M5 4WT
United Kingdom

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