Full Citation

Title: Average Income Tax Rates and Entry into Innovative Self-Employment

Citation Type: Journal Article

Publication Year: 2020

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Abstract: In this paper, I examine the relationship between average income tax rates and the decision to enter into incorporated or unincorporated self-employment in the U.S. The current paper uses incorporated self-employment as a proxy for entrepreneurship and unincorporated self-employment as a proxy for non-innovative business owners. How do individual average income tax rates affect different types of self-employment? To answer this question, I use the Annual Social and Economic (ASEC) supplement of the Current Population Survey (CPS) over the period 2005 to 2019. My findings are in line with many of the previous research about the impacts of taxation on entrepreneurship that are based on the U.S. data. Average tax rates have a positive impact on the probability of becoming an entrepreneur. Conversely, there was no sizable effect of the average tax rates on the probability of becoming an unincorporated business owner. The empirical results are robust across alternative specifications.

Url: https://www.jstor.org/stable/27143986

User Submitted?: No

Authors: Can, Ege

Periodical (Full): Proceedings. Annual Conference on Taxation and Minutes of the Annual Meeting of the National Tax Association

Issue:

Volume: 113

Pages: 1-37

Data Collections: IPUMS CPS

Topics: Labor Force and Occupational Structure

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