Tax Policy and Entrepreneurship: A Framework for Analysis by Garrett Watson and Nicole Kaeding published by Tax Foundation (4/2019).
“There is growing concern by scholars, policymakers, and the general public that America is facing a retreat in the level of economic growth and dynamism enjoyed by Americans since the beginning of the 20th century. A key element of America’s dynamism problem is a drop in entrepreneurship.
The retreat of American economic dynamism may have multifaceted origins, and policymakers will have to consider changes in policy ranging from regulation to housing. Tax policy has a role to play, as taxes are one of the top barriers entrepreneurs list in surveys on their work. While it may take years or decades to determine the right mix of public policy to revive dynamism, changes to tax policy can contribute to the solution in the short to medium run.
A more neutral tax code would increase incentives to work, save, and invest for all in the economy, including entrepreneurs. Removing tax barriers for entrepreneurs would improve America’s dynamism while making America’s tax code more neutral, efficient, and simple for all taxpayers.
Taxes influence the risks entrepreneurs take, the incomes they earn, and their fixed costs. Policymakers should consider the impact of the tax code on the entrepreneurial community as a vehicle for accelerating economic growth and dynamism…”
