Corporate income taxes and entrepreneurship

Block, Joern

doi:10.15185/izawol.257

Cited by 16 publications

(19 citation statements)

References 12 publications

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“…The effect of taxes on entrepreneurial activity has enjoyed a recent resurge in the empirical literature (Block 2016;Braunerhjelm and Eklund 2014;Darnihamedani et al 2018). Empirical evidence links higher corporate taxes with slower economic growth and also lower productivity, innovation, investment, firm creation, and employment (Djankov et al 2010;Da Rin et al 2011;Bacher and Brülhart 2012;Baliamoune-Lutz and Garello 2014;Haufler et al 2014;Belitski et al 2016;Mukherjee et al 2017).…”

Section: Introductionmentioning

confidence: 99%

Corporate taxes and high-quality entrepreneurship

2020

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We examine the impact of corporate taxation on entrepreneurship, using a quasi-natural experiment, which substantially reduced the corporate tax rate for start-ups located in inland municipalities in Portugal. Using a difference-in-differences approach and IV regression, we find that the tax reform increased firm entry and new firm job creation. The entrepreneurs who took advantage of this tax reform are relatively older, and are better-educated individuals. Their start-ups are relatively larger, more productive, and are more likely to survive the first 3 years. These findings suggest that corporate taxation is an imperative constraint for entrepreneurship, particularly for high-quality entrepreneurs. These better-educated individuals find it easier to overcome the hurdles of tax legislation and to make use of the opportunities created by a specific tax reform.

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Section: Introductionmentioning

confidence: 99%

Corporate taxes and high-quality entrepreneurship

2020

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“…The effect of taxes on entrepreneurial activity has enjoyed a recent resurge on empirical literature (Block, 2016;Braunerhjelm and Eklund, 2014;Darnihamedani, Block, Hessels and Simonyan, 2018).…”

Section: Introductionmentioning

confidence: 99%

Corporate Taxes and High-Quality Entrepreneurship: Evidence from a Tax Reform

Venâncio

Barros

Raposo³

2020

SSRN Journal

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We examine the impact of corporate taxation on entrepreneurship, using a quasi-natural experiment, which substantially reduced the corporate tax rate for start-ups located in inland municipalities in Portugal. Using a difference-indifferences approach and IV regression, we find that the tax reform increased firm entry by approximately 0.41% and birth job creation by 0.24% monthly, corresponding to an increase of 29,150 new firms, and 223,500 news jobs over a period of three years. We find that the entrepreneurs who took advantage of this tax reform are mostly male, relatively older and well-educated individuals. Their start-ups are relatively larger (up to 10 employees) and are on average more productive and more likely to survive their first three years. These findings suggest that corporate taxation is an imperative constraint for entrepreneurship, particularly for high-quality entrepreneurs. High-quality entrepreneurs can more easily overcome the hurdles of tax legislation and they have the required knowledge to tackle the opportunity created by a tax reform.

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“…According to Clingingsmith and Shane [4], while the deterrent effects are associated with risk taking explanation (i.e., the asymmetric taxation of profits and losses), the boosting effects are associated with the tax avoidance story. It should be also noted that tax systems can differ in their progressivity, and designing a tax structure is a very complex task due to their effects on different individuals such as employees, business owners, and so on [5,6]. However, from a policy perspective, assuming that any changes to the tax code must be revenue-neutral, it is only the tax structure that can be changed.…”

Section: Introductionmentioning

confidence: 99%

Tax Progressivity and Entrepreneurial Dynamics

Nadirov

Dehning

2020

Sustainability

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This study examines how tax progressivity affects entrepreneurial dynamics in 18 countries. The results show that increased downside progressivity has a positive influence on the transition rate from nascent entrepreneurship to established business ownership. In addition, only downside progressivity calculated using marginal tax rates is related to the transition ratio, implying that it is marginal tax rates, and not average tax rates, that are used in the entrepreneurial decision-making process. This paper contributes to our understanding of entrepreneurial dynamics and the effect of tax progressivity on the transition from nascent entrepreneurship to established business ownership.

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Corporate income taxes and entrepreneurship

Cited by 16 publications

References 12 publications

Corporate taxes and high-quality entrepreneurship

Corporate taxes and high-quality entrepreneurship

Corporate Taxes and High-Quality Entrepreneurship: Evidence from a Tax Reform

Tax Progressivity and Entrepreneurial Dynamics

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