Institute for Research in Economic and Fiscal issues

IREF Europe - Institute for Research in Economic and Fiscal issues

Für wirtschaftliche Freiheit
und Steuerwettbewerb

von ,

The Effect of Tax Progressivity on the Quality of Entrepreneurship

IREF Working Paper No. 201501: Mina Baliamoune-Lutz and Pierre Garello

Does progressive taxation on corporate income discourage entrepreneurship? At first glance, the answer seems in the positive, since as tax pressure on business increases, business activities become less profitable and, therefore, less attractive. On the other hand, one might also argue that tax progressivity affects large-size companies. Thus, big firms might vanish and small firms (small-size entrepreneurs) might be overrepresented.

This paper uses a simple theoretical model to examine the interaction between progressive taxation, effort and wealth creation. It is shown that progressive taxation, while not affecting the behavior of entrepreneurs with less profitable opportunities, leads entrepreneurs benefiting from good or fairly good opportunities to reduce effort in order to lower the tax burden they would face should they maintain higher levels of effort.

By studying a sample of Italian firms during the 2001-2010 period, it is shown that progressive taxation weakens entrepreneurial effort (quality) when such effort is intense. For low-quality entrepreneurship, this effect is virtually absent.

In this light, the authors conclude that progressive taxation has a negative impact on innovation and prevents firms from growing and reaching efficient size. Hence, the negative consequences for growth.

IREF Working Paper No. 201501: Mina Baliamoune-Lutz and Pierre Garello

PDF - 1.7 MB

Diesen Artikel teilen :

Ähnliche Artikel ...

Regelmissachtende Politiker und Kooperationsbereitschaft

Regulation and government debt

Hauspreise in Deutschland: Langfristig rätselhaft stabil und niedrig

Besser dran ohne Berlin?

Eine Nachricht oder einen Kommentar hinterlassen?

Formular anzeigen

 css js

Mit der Nutzung unserer Webseite erklären Sie sich mit der Verwendung von Cookies einverstanden.
S C H L I E ß E N

Monatlicher Newsletter.
Bleiben Sie stets informiert.