IDEAS home Printed from https://ideas.repec.org/p/hhs/iuiwop/0982.html
   My bibliography  Save this paper

Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden

Author

Listed:
  • Edmark, Karin

    () (Research Institute of Industrial Economics (IFN))

  • Gordon, Roger

    () (University of California)

Abstract

This paper estimates the role of both tax and non-tax determinants in the choice in Sweden to be a closely-held corporation vs. a proprietorship, using individual data for 2004 to 2008 on owners of closely-held businesses. While lower-income individuals face relatively neutral incentives, higher income individuals face strong tax incentives to be corporate. The data suggest a relatively strong correlation between these tax incentives and the likelihood that a firm is corporate. Many conventional non-tax determinants are confirmed in the data as well.

Suggested Citation

  • Edmark, Karin & Gordon, Roger, 2013. "Taxes and the Choice of Organizational Form by Entrepreneurs in Sweden," Working Paper Series 982, Research Institute of Industrial Economics.
  • Handle: RePEc:hhs:iuiwop:0982
    as

    Download full text from publisher

    File URL: http://www.ifn.se/wfiles/wp/wp982.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gordon, Roger H. & MacKie-Mason, Jeffrey K., 1994. "Tax distortions to the choice of organizational form," Journal of Public Economics, Elsevier, vol. 55(2), pages 279-306, October.
    2. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    3. Mackie-Mason, Jeffrey K & Gordon, Roger H, 1997. " How Much Do Taxes Discourage Incorporation?," Journal of Finance, American Finance Association, vol. 52(2), pages 477-505, June.
    4. Jukka Pirttilä & Håkan Selin, 2011. "Income Shifting within a Dual Income Tax System: Evidence from the Finnish Tax Reform of 1993," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113(1), pages 120-144, March.
    5. Jarkko Harju & Tuomas Kosonen, 2012. "The Impact of Tax Incentives on the Economic Activity of Entrepreneurs," NBER Working Papers 18442, National Bureau of Economic Research, Inc.
    6. Per Engstrom & Bertil Holmlund, 2009. "Tax evasion and self-employment in a high-tax country: evidence from Sweden," Applied Economics, Taylor & Francis Journals, vol. 41(19), pages 2419-2430.
    7. Sven-Olov Daunfeldt & Ulrika Praski-Ståhlgren & Niklas Rudholm, 2010. "Do high taxes lock-in capital gains? Evidence from a dual income tax system," Public Choice, Springer, vol. 145(1), pages 25-38, October.
    8. Rosanne Altshuler & Alan J. Auerbach, 1990. "The Significance of Tax Law Asymmetries: An Empirical Investigation," The Quarterly Journal of Economics, Oxford University Press, vol. 105(1), pages 61-86.
    9. Thor O. Thoresen & Annette Alstadsæter, 2010. "Shifts in Organizational Form under a Dual Income Tax System," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 66(4), pages 384-418, December.
    10. Goolsbee, Austan, 2004. "The impact of the corporate income tax: evidence from state organizational form data," Journal of Public Economics, Elsevier, vol. 88(11), pages 2283-2299, September.
    11. Goolsbee, Austan, 1998. "Taxes, organizational form, and the deadweight loss of the corporate income tax," Journal of Public Economics, Elsevier, vol. 69(1), pages 143-152, July.
    12. Romanov, Dmitri, 2006. "The corporation as a tax shelter: Evidence from recent Israeli tax changes," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1939-1954, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gale, William & Brown, Samuel, 2013. "Small Business, Innovation, and Tax Policy: A Review," MPRA Paper 57384, University Library of Munich, Germany.
    2. Pontus Braunerhjelm & Magnus Henrekson, 2013. "Entrepreneurship, institutions, and economic dynamism: lessons from a comparison of the United States and Sweden," Industrial and Corporate Change, Oxford University Press, vol. 22(1), pages 107-130, February.
    3. Bräutigam, Rainer & Spengel, Christoph & Stutzenberger, Kathrin, 2017. "The development of corporate tax structures in the European Union from 1998 to 2015 - Qualitative and quantitative analysis," ZEW Discussion Papers 17-034, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Edquist, Harald & Henrekson, Magnus, 2013. "Product Market Reforms and Incentives to Innovate in Sweden," Working Paper Series 986, Research Institute of Industrial Economics.

    More about this item

    Keywords

    Self-employment; Entrepreneurship; Taxation of closely-held businesses; Business organizational form;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:iuiwop:0982. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Elisabeth Gustafsson). General contact details of provider: http://edirc.repec.org/data/iuiiise.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.