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Tax Progressivity and Entrepreneurial Dynamics

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  • Orkhan Nadirov

    (Faculty of Management and Economics, Tomas Bata University in Zlin, Nám. T. G. Masaryka 5555, 760 01 Zlín, Czech Republic)

  • Bruce Dehning

    (Argyros School of Business and Economics, Chapman University One University Drive, Orange, CA 92866, USA)

Abstract

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.

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  • Orkhan Nadirov & Bruce Dehning, 2020. "Tax Progressivity and Entrepreneurial Dynamics," Sustainability, MDPI, vol. 12(9), pages 1-21, April.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:9:p:3584-:d:351601
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