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Tax Policy and Entrepreneurship: New Time Series Evidence

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  • Donald Bruce
  • Mohammed Mohsin

Abstract

Have tax policies affected entrepreneurial activity in the U.S.? We extend the time series literature on this topic by using more recent data and modern econometric techniques to examine the importance of federal income, payroll, capital gains, corporate income, and estate taxes on self-employment rates. Regression results show that most of these taxes have significant but small effects on self-employment activity. A battery of cointegration and causality tests confirms the general finding that taxes can have significant influences on entrepreneurship, but they are likely to be ineffective tools for generating meaningful changes in entrepreneurial activity. Copyright Springer 2006

Suggested Citation

  • Donald Bruce & Mohammed Mohsin, 2006. "Tax Policy and Entrepreneurship: New Time Series Evidence," Small Business Economics, Springer, vol. 26(5), pages 409-425, June.
    • Handle: RePEc:kap:sbusec:v:26:y:2006:i:5:p:409-425
    DOI: 10.1007/s11187-005-5602-8
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    References listed on IDEAS

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    More about this item

    Keywords

    self-employment; tax policy; time series analysis; H2; J2;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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