Mayberry MA, Nipper M, Weiß M
Publication Language: English
Publication Type: Other publication type, SSRN Working Paper
Publisher: SSRN
This paper examines whether personal income taxes affect corporate pollution decisions through managerial incentives. While prior research extensively studies how corporate tax burdens shape firm behavior, little is known about whether taxes levied on individual executives spill over into firm-level externalities. We exploit staggered, exogenous increases in U.S. state-level personal income tax rates applicable to top income brackets to investigate whether higher personal tax burdens for managers lead to increases in toxic emissions reported under the EPA's Toxic Release Inventory. Using a stacked difference-in-differences design, we find that firms headquartered in states that increase personal income taxes significantly increase their pollution. The effect is concentrated among onsite and airborne releases and is stronger for firms with younger CEOs, greater ESG slack, and lower institutional ownership. Overall, our findings suggest that higher personal income taxes increase managers’ willingness to take risk, leading them to adjust pollution along high-discretion, low-visibility margins.
APA:
Mayberry, M.A., Nipper, M., & Weiß, M. (2026). Personal Income Taxes and Corporate Pollution. SSRN.
MLA:
Mayberry, Michael A., Marvin Nipper, and Marius Weiß. Personal Income Taxes and Corporate Pollution. SSRN, 2026.
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