Loutzenhiser, Glen --- "Taxing Executive Compensation" [2012] ELECD 612; in Thomas, S. Randall; Hill, G. Jennifer (eds), "Research Handbook on Executive Pay" (Edward Elgar Publishing, 2012)

Book Title: Research Handbook on Executive Pay

Editor(s): Thomas, S. Randall; Hill, G. Jennifer

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781849803960

Section: Chapter 14

Section Title: Taxing Executive Compensation

Author(s): Loutzenhiser, Glen

Number of pages: 15

Extract:

14 Taxing executive compensation
Glen Loutzenhiser


The primary goal of any tax system is to raise money to pay for the services provided by
the State. Ideally, in so doing, the tax system should operate in an efficient and fair way
that does not favour certain taxpayers or economic activities over others, and the rules
should be easy for taxpayers to comply with and government to administer. Tax systems
can be (and are) used to advance other goals as well, such as redistributing wealth from
the better off to the less well off in society. Tax also can be a powerful macro-economic
tool ­ taxes can be raised to cool a charging economy, or, as witnessed recently in the US,1
taxes can be cut to stimulate investment and consumer spending. Finally, the tax system
can be used as a tool of social policy, providing tax incentives to encourage desirable
behaviour (eg tax credits for investing in `green' technology) and tax penalties to discour-
age other behavior (eg `sin taxes' on tobacco and alcohol). The price to be paid for pursu-
ing social goals through the tax system, however, is a tax regime that inevitably is less
coherent, more detailed and more complicated than it otherwise would be.
Employment taxation is one area of tax law that has been particularly susceptible to
political tinkering in the pursuit of goals other than raising revenue in the most simple,
fair and economically efficient way possible. The UK employment tax regime, for
example, ...