Small Business Economics

, Volume 26, Issue 5, pp 409–425 | Cite as

Tax Policy and Entrepreneurship: New Time Series Evidence

Article

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.

Keywords

self-employment tax policy time series analysis 

JEL Classification

H2 J2 

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Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Center for Business and Economic ResearchThe University of TennesseeKnoxvilleU.S.A
  2. 2.Department of EconomicsThe University of TennesseeKnoxvilleU.S.A

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