“Let’s turn to taxation of the top 0.1 percent, and focus on these CEOs. If the tax rate on their income/capital gains goes up, the firm will compensate by giving them more equity/options, to keep them working hard. In other words, the tax rate on the top earners can be hiked without much effect on CEO effort because there is an offset internal to the firm,” – Tyler Cowen.
The cost of this, of course, is still carried by the shareholders. But not quite so much by the tax-payer.
The Dish 