Tax Progressivity and Entrepreneurial Dynamics

This study examines how tax progressivity affects entrepreneurial dynamics in 18 countries. The results show that increased downside progressivity has a positive influence on the transition rate from nascent entrepreneurship to established business ownership. In addition, only downside progressivity...

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Bibliographic Details
Published in:Sustainability 2020-05, Vol.12 (9), p.3584
Main Authors: Nadirov, Orkhan, Dehning, Bruce
Format: Article
Language:English
Subjects:
Decision making
Entrepreneurs
Entrepreneurship
Longitudinal studies
Self employment
Sustainability
Tax rates
Taxation
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Summary:This study examines how tax progressivity affects entrepreneurial dynamics in 18 countries. The results show that increased downside progressivity has a positive influence on the transition rate from nascent entrepreneurship to established business ownership. In addition, only downside progressivity calculated using marginal tax rates is related to the transition ratio, implying that it is marginal tax rates, and not average tax rates, that are used in the entrepreneurial decision-making process. This paper contributes to our understanding of entrepreneurial dynamics and the effect of tax progressivity on the transition from nascent entrepreneurship to established business ownership.
ISSN:2071-1050
2071-1050
DOI:10.3390/su12093584