Taxes and Entrepreneurial Endurance: Evidence from the Self-Employed
AbstractDo taxes drive entrepreneurs out of business? This paper uses panel data on self-employed workers to examine whether differential income and payroll taxes affect their decisions to continue operating or to close their doors and take wage-and-salary jobs. I exploit statutory variations in the tax treatment of wage and self-employment income using data from the Panel Study of Income Dynamics. Taking into account the endogeneity of individual-level tax rates, I find that higher relative marginal tax rates on self-employment income do not necessarily increase the probability of exit.
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Bibliographic InfoArticle provided by National Tax Association in its journal National Tax Journal.
Volume (Year): 55 (2002)
Issue (Month): N. 1 (March)
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- Douglas Holtz-Eakin & David Joulfaian & Harvey Rosen, 1993. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Working Papers, Princeton University, Department of Economics, Industrial Relations Section. 698, Princeton University, Department of Economics, Industrial Relations Section..
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