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Do High Tax Rates Encourage Entrepreneurial Activity
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Book Synopsis Do Tax Rates Encourage Entrepreneurial Activity? by : Mr.Roger H. Gordon
Download or read book Do Tax Rates Encourage Entrepreneurial Activity? written by Mr.Roger H. Gordon and published by International Monetary Fund. This book was released on 1997-07-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: When the top personal tax rates are above the corporate rate, high-income individuals have an incentive to reclassify their earnings as corporate rather than personal income for tax purposes. U.S. tax law at least imposes strict limits on the extent to which employees in publicly traded corporations can engage in such income shifting. However, entrepreneurs setting up new firms can easily reclassify their income for tax purposes. This tax incentive therefore favors entrepreneurial activity. The paper discusses how best to subsidize entrepreneurial activity while avoiding other economic distortions.
Book Synopsis Do High Tax Rates Encourage Entrepreneurial Activity by : Roger Hall Gordon
Download or read book Do High Tax Rates Encourage Entrepreneurial Activity written by Roger Hall Gordon and published by . This book was released on 1997 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Do Tax Encourage Entrepreneurial Activity? by : Roger Hall Gordon
Download or read book Do Tax Encourage Entrepreneurial Activity? written by Roger Hall Gordon and published by . This book was released on 1997 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Tax Policies and Entrepreneurship by : Tami Jean Gurley
Download or read book Tax Policies and Entrepreneurship written by Tami Jean Gurley and published by . This book was released on 2005 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: I use a twelve-year panel of tax return data to assess whether or not taxes affect entrepreneurship. Beyond assessing possible distortions in entrepreneurial activities created by the tax system, this research provides information to policymakers on the effectiveness of tax policy in influencing entrepreneurial activity. The extent of entrepreneurial activity in the economy is a vital policy concern as entrepreneurs are thought to contribute to economic growth by creating jobs and producing innovations. Past theoretical and empirical studies examining the effects of taxes on entrepreneurship produced ambiguous results creating the need for further study. Toward this end, I investigate the effects of tax rates on entrepreneurial entry and survival as well as the effects of health insurance deductibility on exits from an entrepreneurial activity. My contributions to the current literature include developing a model combining the two past theoretical approaches, using a panel of tax return data, and examining an aspect of the tax system (health insurance deductibility) beyond the tax rates typically studied. I find convincing evidence that marginal tax rates and health insurance deductibility have important effects on entrepreneurial decisions. Results show that increases in marginal tax rates on wage income increase the probability of entry, increase the duration of entrepreneurial activities, and decrease the probability of exit. Increases in marginal tax rates on entrepreneurship income decrease the probability of entry, shorten entrepreneurial spells, and increase the probability of exit. The effects from changes in the entrepreneurial marginal tax rate are larger than those from the marginal tax rate on wages suggesting that an across the board tax cut would increase entrepreneurship by increasing entry, decreasing exit, and enhancing survival. Additionally, the availability of a health insurance deduction from income tax calculations enhances entrepreneurial survival. Taken together, the results indicate that tax policy is a potentially effective tool for influencing levels of entrepreneurship in the economy. More broadly, these results provide evidence that multiple aspects of the tax code, including but not limited to tax rates, are relevant for assessing behavioral responses.
Book Synopsis Taxes and Entrepreneurship by : Donald Bruce
Download or read book Taxes and Entrepreneurship written by Donald Bruce and published by . This book was released on 2020 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: Taxes and Entrepreneurship reviews the existing empirical literature on the impacts of tax policies on entrepreneurial activity and presents an agenda for future research.
Book Synopsis Entrepreneurship and Tax Policy by : Grant Sawyer
Download or read book Entrepreneurship and Tax Policy written by Grant Sawyer and published by . This book was released on 2012 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper analyzes the impacts of tax changes on entrepreneurial activity. The analysis is focused on the U.S. personal income and capital gains tax reforms of 2001 and 2003 respectively. For this study a panel data set is constructed from several government agencies. The data is assessed using a time-series model with controls for macroeconomic and industry specific conditions as well factors approximating to capital availability. I find that for the 1998-2009 period there is a statistical, negative correlation between both the personal income tax rate and the capital gains tax rate and entrepreneurship as measured by the number of non-farm sole proprietorships (NFSP) tax returns as a percent of the labor force population across major U.S. industry categories. These findings are contrary to Georgellis and Wall (2002) that personal income tax rates above 35% increase entrepreneurship, but support the conclusions of both Wu (2005) and Bruce (2006) that tax increases negatively impact entrepreneurship. This paper finds that lower taxes at either the personal income or capital gains level encourage entrepreneurship.
Book Synopsis Social Security Programs and Retirement around the World by : Jonathan Gruber
Download or read book Social Security Programs and Retirement around the World written by Jonathan Gruber and published by University of Chicago Press. This book was released on 2009-02-15 with total page 752 pages. Available in PDF, EPUB and Kindle. Book excerpt: Social Security Programs and Retirement around the World represents the second stage of an ongoing research project studying the relationship between social security and labor. In the first volume, Jonathan Gruber and David A. Wise revealed enormous disincentives to continued work at older ages in developed countries. Provisions of many social security programs typically encourage retirement by reducing pay for work, inducing older employees to leave the labor force early and magnifying the financial burden caused by an aging population. At a certain age there is simply no financial benefit to continuing to work. In this volume, the authors turn to a country-by-country analysis of retirement behavior based on micro-data. The result of research compiled by teams in twelve countries, the volume shows an almost uniform correlation between levels of social security incentives and retirement behavior in each country. The estimates also show that the effect is strikingly uniform in countries with very different cultural histories, labor market institutions, and other social characteristics.
Book Synopsis Taxation and Entrepreneurship in the United States by : Hans A. Holter
Download or read book Taxation and Entrepreneurship in the United States written by Hans A. Holter and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the effects of income taxation on entrepreneurship, empirically and in a structural macro model with entrepreneurial choice. Combining state-level tax data with household and firm data we document that higher and more progressive taxation has a strong negative impact on entrepreneurial activity across time and space. A one percentage point increase in the tax rate at median income leads to 4.5% fewer entrepreneurs and 1.5% fewer employees at small firms, whereas a 1% increase in the progressivity of the tax schedule leads to 1.0% fewer entrepreneurs and 0.2% fewer employees at small firms. To explain this relationship and to evaluate the impact of taxation on output and welfare, we develop a life-cycle, incomplete markets model of the labor market with entrepreneurial choice. The model generates elasticities of entrepreneurship to taxation that are similar to those found in the empirical analysis. Progressive taxation lowers both the risk and return to becoming an entrepreneur. However, quantitatively the return effect dominates. We find that converting to a flat tax (while keeping the level of taxes constant) would increase the number of entrepreneurs by 25% and output by 4.5%. Under the assumption of a small open economy, the level of tax progressivity that maximizes steady state welfare is, however, only slightly lower than for the current U.S. tax code. Allowing for general equilibrium effects, the socially optimal tax code is about half as progressive as today and would lead to a 0.4% welfare gain if implemented.
Book Synopsis The Effect of Corporate Taxes on Investment and Entrepreneurship by : Simeon Djankov
Download or read book The Effect of Corporate Taxes on Investment and Entrepreneurship written by Simeon Djankov and published by . This book was released on 2008 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy. The results are robust to the inclusion of controls for other tax rates, quality of tax administration, security of property rights, level of economic development, regulation, inflation, and openness to trade.
Book Synopsis The Effect of Corporate Taxes on Investment and Entrepreneurship by : Simeon Djankov
Download or read book The Effect of Corporate Taxes on Investment and Entrepreneurship written by Simeon Djankov and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present new data on effective corporate income tax rates in 85 countries in 2004. The data come from a survey, conducted jointly with PricewaterhouseCoopers, of all taxes imposed on "the same" standardized mid-size domestic firm. In a cross-section of countries, our estimates of the effective corporate tax rate have a large adverse impact on aggregate investment, FDI, and entrepreneurial activity. For example, a 10 percent increase in the effective corporate tax rate reduces aggregate investment to GDP ratio by 2 percentage points. Corporate tax rates are also negatively correlated with growth, and positively correlated with the size of the informal economy. The results are robust to the inclusion of controls for other tax rates, quality of tax administration, security of property rights, level of economic development, regulation, inflation, and openness to trade.
Book Synopsis Taxes and Entrepreneurship by : Donald Bruce
Download or read book Taxes and Entrepreneurship written by Donald Bruce and published by . This book was released on 2020-06-08 with total page 60 pages. Available in PDF, EPUB and Kindle. Book excerpt: Taxes and Entrepreneurship reviews the existing empirical literature on the impacts of tax policies on entrepreneurial activity and presents an agenda for future research. The authors first discuss the many ways in which researchers have measured entrepreneurship and small business activity. They explore the various strengths and weaknesses of measures of stocks versus flows, individual versus aggregate analyses, survey versus administrative data, and extensive versus intensive margin indicators of entrepreneurship. The monograph then discusses the various tax rates and other tax policies that have been considered in the literature, again considering their advantages and disadvantages. Next, a few of the major empirical issues facing research on taxes and entrepreneurship are reviewed including the possible endogeneity or simultaneity of tax rates, the importance of timing issues, and the latest econometric attempts to account for pre-existing trends in entrepreneurship and tax data. The authors present an exhaustive and inclusive summary of the large and growing empirical literature on taxes and entrepreneurship. In an effort to enhance the usefulness of the monograph, the literature is segmented into U.S. federal studies, U.S. state and local studies, and international studies. It is further subdivided into time series, cross-sectional, and longitudinal analyses. The literature review provides a synthesis of findings spanning all of the above categories and focusing on what are the most conclusive studies in each area. The monograph concludes with a discussion of future avenues for empirical research in this area based on the identified gaps in the existing literature.
Download or read book The Flat Tax written by Robert E. Hall and published by Hoover Press. This book was released on 2013-09-01 with total page 245 pages. Available in PDF, EPUB and Kindle. Book excerpt: This new and updated edition of The Flat Tax—called "the bible of the flat tax movement" by Forbes—explains what's wrong with our present tax system and offers a practical alternative. Hall and Rabushka set forth what many believe is the most fair, efficient, simple, and workable tax reform plan on the table: tax all income, once only, at a uniform rate of 19 percent.
Book Synopsis Taxes and Entrepreneurial Activity by : Julie Berry Cullen
Download or read book Taxes and Entrepreneurial Activity written by Julie Berry Cullen and published by . This book was released on 2002 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: Entrepreneurial activity is presumed to generate important spillovers, potentially justifying tax subsidies. How does the tax law affect individual incentives? How much of an impact has it had in practice? We first show theoretically that taxes can affect the incentives to be an entrepreneur due simply to differences in tax rates on business vs. wage and salary income, due to differences in the tax treatment of losses vs. profits through a progressive rate structure and through the option to incorporate, and due to risk-sharing with the government. We then provide empirical evidence using U.S. individual tax return data that these aspects of the tax law have had large effects on actual behavior
Book Synopsis Do Tax Encourage Entrepreneurial Activity? by : Roger Hall Gordon
Download or read book Do Tax Encourage Entrepreneurial Activity? written by Roger Hall Gordon and published by . This book was released on 1997 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Essays on Entrepreneurs and Taxation by : Nakornthab Arm
Download or read book Essays on Entrepreneurs and Taxation written by Nakornthab Arm and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Apart from the introduction and conclusion, this thesis consists of three chapters focusing on taxation in the model with entrepreneurship. Using a simplified life-cycle structure, these three chapters aim to give policy implications regarding various kind of taxes in the U.S. economy. The focus is more involved with tax at the top wealth or income distribution, which necessitates the model capable of capturing the wealth distribution correctly. Including entrepreneurship in the model is one of the available approaches for replicating the U.S. wealth distribution. In chapter 2 (joint with Çagri Kumru) we study the interaction between estate taxation and annuity demand both analytically and quantitatively. Having entrepreneurs yields a novel finding for annuity demands of non-entrepreneurs (workers) and entrepreneurs. The simple analytical model shows that lower estate tax rates result in lower annuity demands. The quantitative model shows that annuity demand is indeed sensitive to the changes in the estate tax system. Removing the estate tax rate reduces the annuity demand substantially when the government's budget is balanced with an increase in the proportional income tax rate. Removing the exemption level generates the most striking result that if all individuals face the estate tax, the annuity ownership rate increases dramatically. In chapter 3 (joint with Ayse Imrohoroglu and Çagri Kumru), we study optimal income taxation in a model with entrepreneurial activity. We conduct two types of changes in tax policy: changing the overall progressivity of taxes versus changing the tax rate of the richest one percent of the population. We study the implications of these tax policies on welfare, inequality, and government revenues. The results indicate that increasing the overall progressivity of taxes results in lower wealth inequality and higher welfare relative to increasing the tax rate on the richest one percent of the population. In chapter 4, I analyze the implications of the capital income tax, the wealth tax, and the estate tax on economic aggregates and welfare and search for the optimal wealth tax rate. When capital income tax is replaced by the wealth tax, there is a modest welfare gain. In contrast, replacing the current estate tax system with a wealth tax system leads to an overall welfare loss. The highest welfare gain is realized when the capital income tax is replaced by wealth tax at the top. Finally, the optimal wealth tax rate as 5.75 percent. Although the optimal wealth tax increases welfare substantially, it makes wealth inequality even worse.
Book Synopsis Owner-Level Taxes and Business Activity by : Magnus Henrekson
Download or read book Owner-Level Taxes and Business Activity written by Magnus Henrekson and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis How Should Taxes Be Designed to Encourage Entrepreneurship? by : Roger H. Gordon
Download or read book How Should Taxes Be Designed to Encourage Entrepreneurship? written by Roger H. Gordon and published by . This book was released on 2017 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines how tax policy should be designed to best encourage entrepreneurial activity in start-up firms. We begin by describing several presumed market failures affecting entrepreneurial firms that would lead to an under-provision of entrepreneurial activity: 1) information spillovers from innovations in entrepreneurial firms to other firms, 2) positive externalities to consumers from innovative new products sold by these firms, and 3) lemons problems in the market for both debt and equity issued by these firms. We then analyze the degree to which various tax policy measures can alleviate these failures. A key complication we focus on is the inability of the government to observe which, and the degree to which, any given start-up firm is entrepreneurial. This forces policy to target behavioral differences between entrepreneurial and non-entrepreneurial start-ups. We presume that start-up firms, to the degree they are entrepreneurial, face upfront costs in developing and marketing a new technology, and in the process face substantial risk. Our analysis then suggests the use of refundable tax savings from business losses in start-ups together with a compensating surtax on the profits of start-ups (needed in the case of lemons problems) to yield efficient entry incentives for entrepreneurial start-ups.
