Hilmer, Michael - Max-Planck-Institut für Steuerrecht und öffentliche … - 2013
In a principal-agent model, we analyze the consequences of bonus taxes agents need to pay, limited deductibility of …'s net bonus and reduces effort. Limited deductibility has neither effect. In equilibrium, both instruments reduce the agent … incentive contract. In terms of welfare, limited deductibility and bonus taxes are close substitutes. Both lead to a welfare …