The effects of the 1986 and 1993 tax reforms on self-employment

Kevin B. Moore
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Kevin B. Moore: https://www.federalreserve.gov/econres/kevin-b-moore.htm

No 2004-05, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: This paper adds a new dimension to the literature that uses individual level data to assess the effects of tax policy on self-employment. Specifically, this study uses repeated cross-section data from the Surveys of Consumer Finances (SCF) against the background of the tax reforms of 1986 and 1993 to gauge the influence of taxes on self-employment. Using the 1986 and 1993 tax rate reforms as natural experiments allows for the identification of the effect of taxes on the choice to become self-employed. The findings of this paper indicate that marginal and average tax rates are negatively related to the propensity to become self-employed. However, these effects are only significant for the 1986 tax reforms and are sensitive to the model specification. Other factors, such as education, industry, wealth, and attitude toward risks, are consistently more important influences on the choice to become self-employed.

Keywords: Taxation (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2004-05

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