Corporate Tax Breaks and Executive Compensation, Eric Ohrn, Department of Economics, Grinnell College, February, 2021 – “I analyze the effect of two corporate tax breaks, bonus depreciation and the Domestic Production Activities Deduction (DPAD), on executive compensation in publicly traded US firms. I find both tax breaks significantly increase executive compensation. For every dollar a firm benefits from the tax breaks, compensation of the firm’s top five highest paid executives in-creases by 15 to 19 cents. These effects are much larger than the effect of corporate tax cuts on average wages, suggesting the tax breaks increase within-firm income inequality. The tax breaks increase compensation exclusively in firms with weaker governance structures…In this study, I address this question by measuring the effect of two recent US federal corporate tax expenditures (or “breaks”) on the value of compensation awarded to executives at large publicly traded corporations. I find both corporate tax breaks significantly increase executive compensation. I estimate that for every dollar generated by the tax breaks, compensation of the top five highest paid executives at publicly traded US firms increased by 15 and 19 cents.”