Posted by Noam Noked (The Chinese University of Hong Kong), on Thursday, December 28, 2017
Editor's Note: Noam Noked is assistant professor of law at The Chinese University of Hong Kong. This post is based on his recent article, published in the William & Mary Business Law Review.
Policymakers have long viewed tax policy as an instrument to influence and change corporate governance practices. Certain tax rules were enacted to discourage pyramidal business structures and large golden parachutes, and to encourage performance-based compensation. Other proposals, such as imposing higher taxes on excessive executive compensation, have also attracted increasing attention. Contrary to that view, this article contends that the ability to effectively mitigate corporate governance problems and increase efficiency through the use of corrective taxes is very limited. The existing corrective taxes should be reconsidered, and in certain cases revoked and replaced with other more efficient forms of regulation.