PRESENTATION Research question and literature review Effects of corporate income tax avoidance in the economy What the question adds to the existing literature. Several scholars have done research on how avoidance if corporate income tax has increased their pay as well as the corporations' profits. They have not explained on how the avoidance of corporate tax has affected the economy. The Corporate income tax is among the major sources of the federal revenue, through research in 2014 it raises about $320.7 billion in the fiscal year, 10.6 percent of all the countries’ revenue and 1.9 percent out of all the gross domestic product. Economic framework. When these corporate income taxes are avoided, the amount of money available to provide public goods and services reduces and consequently, the economy increased very much making it be out of balance. Again, corporate income tax has contributed to budget shortfall. Corporations are complaining that there has been increased tax rate in the Federal income tax but what has led to this is the failure for many corporations to pay taxes on the amount of profits they make (Lebergott 2015). Potential Data Sources The target population will be ; several CEOs in selected corporation unions which deal with different corporations the Fed which controls all the accounting and finances of the country lastly is workers within those selected corporations Importance of the Question The importance of this research proposal will be to educate the relevant people on how this act of corporate income tax avoidance has towards the economy. After which the expected measures will be taken to ensure that the economy is will control and people are not taxed very high (Onji and Tang 2015). The gap between employees and the CEO pay affects the performance of the firm Research shows that the size of the gap is determined the by the size of the firm of the industry (Carpenter and Sanders (2002). But vertical pay disparity has negative effects on the firm, for example, the Korea firms How the firm performance affects the CEO pay beyond what average employees make. Between 1978 and 2014 after the inflation adjustments, CEO pay increased by about 1,000 percent while employees in the same period their pay increased by only 11 percent. In this research, there are several factors which influence the firms pay apart from the individual CEO so the CEO is not to blame here and should just be paid despite the firms' performance (Pathak et.al 2014). References Carpenter, M. A., & Sanders, W. M. (2002). Top management team compensation: The missing link between CEO pay and firm performance? Strategic Management Journal, 23(4), 367-375. Conyon, M. J., & Murphy, K. J. (2000). The prince and the pauper? CEO pay in the United States and the United Kingdom. The Economic Journal, 110(467), 640-671. Gabaix, X., & Landier, A. (2006). Why has CEO pay increased so much? (No. w12365). Nation.

1. PRESENTATION
Research question and literature review
Effects of corporate income tax avoidance in the economy
What the question adds to the existing literature.
Several scholars have done research on how avoidance if
corporate income tax has increased their pay as well as the
corporations' profits.
They have not explained on how the avoidance of corporate tax
has affected the economy.
The Corporate income tax is among the major sources of the
federal revenue, through research in 2014 it raises about $320.7
billion in the fiscal year, 10.6 percent of all the countries’
revenue and 1.9 percent out of all the gross domestic product.
Economic framework.
When these corporate income taxes are avoided, the amount of
money available to provide public goods and services reduces
and consequently, the economy increased very much making it
be out of balance.
Again, corporate income tax has contributed to budget shortfall.
Corporations are complaining that there has been increased tax
rate in the Federal income tax but what has led to this is the
failure for many corporations to pay taxes on the amount of
profits they make (Lebergott 2015).
Potential Data Sources
The target population will be ;
several CEOs in selected corporation
unions which deal with different corporations

2. the Fed which controls all the accounting and finances of the
country
lastly is workers within those selected corporations
Importance of the Question
The importance of this research proposal will be to educate the
relevant people on how this act of corporate income tax
avoidance has towards the economy.
After which the expected measures will be taken to ensure that
the economy is will control and people are not taxed very high
(Onji and Tang 2015).
The gap between employees and the CEO pay affects the
performance of the firm
Research shows that the size of the gap is determined the by the
size of the firm of the industry (Carpenter and Sanders (2002).
But vertical pay disparity has negative effects on the firm, for
example, the Korea firms
How the firm performance affects the CEO pay beyond what
average employees make.
Between 1978 and 2014 after the inflation adjustments, CEO
pay increased by about 1,000 percent while employees in the
same period their pay increased by only 11 percent.
In this research, there are several factors which influence the
firms pay apart from the individual CEO so the CEO is not to
blame here and should just be paid despite the firms'
performance (Pathak et.al 2014).
References
Carpenter, M. A., & Sanders, W. M. (2002). Top management

3. team compensation: The missing link between CEO pay and
firm performance? Strategic Management Journal, 23(4), 367-
375.
Conyon, M. J., & Murphy, K. J. (2000). The prince and the
pauper? CEO pay in the United States and the United Kingdom.
The Economic Journal, 110(467), 640-671.
Gabaix, X., & Landier, A. (2006). Why has CEO pay increased
so much? (No. w12365).
National Bureau of Economic Research.
Lebergott, S. (2015). The American Economy: Income, Wealth,
and Want. Princeton University Press.
Pathak, S., Hoskisson, R. E., & Johnson, R. A. (2014). Settling
up in CEO compensation: The impact of divestiture intensity
and contextual factors in refocusing firms. Strategic
Management Journal, 35(8), 1124-1143.
Onji, K., & Tang, J. P. (2015). A nation without a corporate
income tax: Evidence from the nineteenth century Japan. ANU
Centre for Economic History Discussion Paper Series, (2015-
09).
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the
Public Sector: Fourth International Student Edition. WW Norton
& Company.
Warren, A. G. (2015). Enough is Enough: Business Tax Cuts
Fail to Grow the Economy.
The Effects of Corporate Income Tax and CEO Compensation
on the Economy. 1
The Effects of Corporate Income Tax and CEO Compensation
on the Economy. 4
What are the effects of corporate income tax avoidance and
CEO compensation on the economy as a whole?
Research question and literature discussion

4. The Federal corporate income tax is a tax on the income of
corporations in the United States. The Corporate income tax is
among the major sources of the federal revenue, raising about
$320.7 billion in the 2014 fiscal year, which was 10.6 percent
of all the Federal Government’s tax revenue and 1.9 percent of
the United States gross domestic product (Gabaix and Landier
2006). Worldwide profits are paid by the U.S multinationals
while the tax on profit for the foreign subsidiaries is paid by the
parent corporation within the U.S. Corporate profits are also
subject to a layer of taxation on the shareholder. Shareholders
can be taxed for dividend distributions by the corporation, as
well as for short or long term capital gains from the sale of their
shares. The maximum tax on capital gains and dividends is 23.8
percent which includes a net investment income of 3.8 percent
(Stiglitz and Rosengard 2015).
From previous literature on how the gap between employees and
the CEO pay affects the performance of the firm, research
shows that the size of the gap is generally determined by the
size of the firm in the industry (Carpenter and Sanders (2002).
Vertical pay disparity has negative effects on the firm, for
example, in Korean firms. This is based off of research on how
firm performance affects the CEO compensation beyond what
average employees make. Between 1978 and 2014, after the
inflation adjustments, CEO pay increased by about 1,000
percent while employees in the same period saw their pay
increase by only 11 percent. However, in this research there are
several factors which influence the firms pay apart from the
individual CEO which implies that the CEO is not to blame here
and should be paid despite the firms' performance (Pathak et.al
2014).
Many CEOs have been able to avoid corporate income tax and
switched to being taxed as flow-through entities. Examples of
these flow-through entities are sole proprietorships and
partnerships (Warren 2015). The business is not faced with an
entity level tax; the owners are supposed to include the
business's profits together with their taxable income at the

5. individual level under the income tax specifications. Between
the 1950s and 1980s, the relative benefit of corporate tax been a
source of revenue decreased with a very big margin. One way
that CEOs increases their pay and boost companies' profits is by
avoiding corporate income taxes (Conyon and Murphy 2000).
For example, in 2005 the CEO of Mandelez International Irene
Rosenfeld received $19,674,812 in total compensation.
In this research proposal, we will be able to question the roles
that CEOs play in the economy as a whole by examining the
effects of CEO compensation on business performance, while
also taking into account the effects of business performance on
the economy. Several scholars have done research on how the
avoidance of corporate income tax has increased their pay as
well as the corporations' profits. They have not, however,
explained the deeper implication on how these pay and profit
increases effect the economy. When these corporate income
taxes are avoided, the amount of money available to provide
public goods and services decreases, whereas consequently, the
economy increased relative to it, making it out of balance.
Again, corporate income tax has contributed to budget shortfall.
Corporations are complaining that there has been increased tax
rates in the Federal income tax but what this has led to is the
failure of many corporations to pay taxes on a number of profits
they make (Lebergott 2015). We will use questioners and
interviews, as well as gathering statistics so as to get the
relevant information on our topic. The target population would
be several CEOs in selected corporations, unions which deal
with different corporations, the Fed which controls the
country’s accounting and finances and lastly, workers within
those selected corporations. The importance of this research
proposal will be to educate the relevant individuals on the effect
of the act of corporate income tax avoidance relative to CEO
pay has on the economy. After gathering and analysing data, the
expected measures and proposals could be taken to ensure that
the economy is under control and tax rates are more fairly
associated but also better regulated (Onji and Tang 2015).

6. References
Carpenter, M. A., & Sanders, W. M. (2002). Top management
team compensation: The missing link between CEO pay and
firm performance? Strategic Management Journal, 23(4), 367-
375.
Conyon, M. J., & Murphy, K. J. (2000). The prince and the
pauper? CEO pay in the United States and the United Kingdom.
The Economic Journal, 110(467), 640-671.
Gabaix, X., & Landier, A. (2006). Why has CEO pay increased
so much? (No. w12365).
National Bureau of Economic Research.
Lebergott, S. (2015). The American Economy: Income, Wealth,
and Want. Princeton University Press.
Pathak, S., Hoskisson, R. E., & Johnson, R. A. (2014). Settling
up in CEO compensation: The impact of divestiture intensity
and contextual factors in refocusing firms. Strategic
Management Journal, 35(8), 1124-1143.
Onji, K., & Tang, J. P. (2015). A nation without a corporate
income tax: Evidence from the nineteenth century Japan. ANU
Centre for Economic History Discussion Paper Series, (2015-
09).
Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the
Public Sector: Fourth International Student Edition. WW Norton
& Company.
Warren, A. G. (2015). Enough is Enough: Business Tax Cuts
Fail to Grow the Economy.