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Tax Rates in Small and Large Firms

Author

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  • Davinder Singh
  • Ronald P. Wilder
  • Kok Poh Chan

Abstract

This study examines the relationship between firm size and tax rates. Contrary to other recent studies, these findings demonstrate that corporations in the smallest size group pay the highest effective corporate tax rates. 1 It is suggested that the higher tax rates of small firms can be explained in terms of selling, general and administrative expenses. Selling, general and administrative expenses as a ratio to sales are more than 50% higher for small corporations than for the largest firms in the non-durable manufacturing industry group.

Suggested Citation

  • Davinder Singh & Ronald P. Wilder & Kok Poh Chan, 1987. "Tax Rates in Small and Large Firms," Entrepreneurship Theory and Practice, , vol. 12(2), pages 41-52, October.
    • Handle: RePEc:sae:entthe:v:12:y:1987:i:2:p:41-52
    DOI: 10.1177/104225878701200204
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    References listed on IDEAS

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    1. Zmijewski, Mark E. & Hagerman, Robert L., 1981. "An income strategy approach to the positive theory of accounting standard setting/choice," Journal of Accounting and Economics, Elsevier, vol. 3(2), pages 129-149, August.
    2. Zimmerman, Jerold L., 1983. "Taxes and firm size," Journal of Accounting and Economics, Elsevier, vol. 5(1), pages 119-149, April.
    3. Lawrence Finley, 1984. "Can your Small Company Acquire Resources as Favorably as the Large Company?," Entrepreneurship Theory and Practice, , vol. 9(1), pages 19-25, July.
    4. Robert A. Peterson, 1984. "Small Business Management Assistance: Needs and Sources," Entrepreneurship Theory and Practice, , vol. 9(2), pages 35-45, October.
    5. Hagerman, Robert L. & Zmijewski, Mark E., 1979. "Some economic determinants of accounting policy choice," Journal of Accounting and Economics, Elsevier, vol. 1(2), pages 141-161, August.
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