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Taxes, the tax administrative burden and the entrepreneurial life cycle
Blekinge Institute of Technology, Faculty of Engineering, Department of Industrial Economics.ORCID iD: 0000-0003-0218-7924
Blekinge Institute of Technology, Faculty of Engineering, Department of Industrial Economics.
KTH, SWE.
2019 (English)In: Small Business Economics, ISSN 0921-898X, E-ISSN 1573-0913Article in journal (Refereed) Epub ahead of print
Abstract [en]

We present a modified version of the entrepreneurial choice model, where it is shown that the expected utility of becoming an entrepreneur is decreasing in both the levels of taxes and the tax administrative burden. We extend previous empirical findings by examining how these variables influence entrepreneurs at different stages in the entrepreneurial life cycle. Our findings imply that the effect of the tax administrative burden varies over the entrepreneurial life cycle from strongly negative to insignificant. The most pronounced negative effects appear in the early stages of entrepreneurship. We conclude that a 10% reduction in the tax administrative burden increases the propensity for new business establishments by 4%. Our findings support the idea that tax simplification is one way to encourage entrepreneurship, without any reduction in tax revenues. © 2019, The Author(s).

Place, publisher, year, edition, pages
Springer New York LLC , 2019.
Keywords [en]
Entrepreneurship, Life cycle, Tax administrative burden, Tax complexity
National Category
Business Administration
Identifiers
URN: urn:nbn:se:bth-18040DOI: 10.1007/s11187-019-00195-0Scopus ID: 2-s2.0-85066304891OAI: oai:DiVA.org:bth-18040DiVA, id: diva2:1325045
Available from: 2019-06-14 Created: 2019-06-14 Last updated: 2019-06-14Bibliographically approved

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Braunerhjelm, PontusEklund, Johan

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