Tax structure and entrepreneurship

Document Type

Article

Publication Date

1-1-2014

Abstract

Using macro-level panel data, we examine the effects of taxation and tax progressivity on entrepreneurship in a large group of European countries. We address two main questions. First, we try to explore whether tax increases discourage entrepreneurial activity, focusing on new self-employment (nascent entrepreneurship). Second, we investigate the impact of tax progressivity on entrepreneurship, again focusing on new self-employment. We find that tax progressivity at higher-than-average incomes has a robust negative effect on nascent entrepreneurship. We discuss the policy implications of our results. © 2013 Springer Science+Business Media New York.

Publication Title

Small Business Economics

Volume

42

Issue

1

First Page

165

Last Page

190

Digital Object Identifier (DOI)

10.1007/s11187-013-9469-9

ISSN

0921898X

E-ISSN

15730913

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