Header

UZH-Logo

Maintenance Infos

Entrepreneurial taxation with endogenous entry


Scheuer, Florian (2014). Entrepreneurial taxation with endogenous entry. American Economic Journal: Economic Policy, 6(2):126-163.

Abstract

I analyze the optimal taxation of profits and labor income under endogenous firm formation. Individuals differ in their skill and cost of setting up a firm, and can become workers or entrepreneurs. A tax system in which profits and labor income are subject to the same schedule uses general equilibrium effects through wages to indirectly redistribute across occupations. Optimal policies can involve low tax rates at the top and distortions of firms' input choices. However, these properties disappear under a differential treatment of profits and labor income. Then, redistribution is achieved directly through taxes and production efficiency is always optimal.

Abstract

I analyze the optimal taxation of profits and labor income under endogenous firm formation. Individuals differ in their skill and cost of setting up a firm, and can become workers or entrepreneurs. A tax system in which profits and labor income are subject to the same schedule uses general equilibrium effects through wages to indirectly redistribute across occupations. Optimal policies can involve low tax rates at the top and distortions of firms' input choices. However, these properties disappear under a differential treatment of profits and labor income. Then, redistribution is achieved directly through taxes and production efficiency is always optimal.

Statistics

Altmetrics

Downloads

7 downloads since deposited on 09 Aug 2017
7 downloads since 12 months
Detailed statistics

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:May 2014
Deposited On:09 Aug 2017 12:57
Last Modified:10 Aug 2017 07:27
Publisher:American Economic Association
ISSN:1945-774X
Publisher DOI:https://doi.org/10.1257/pol.6.2.126

Download

Preview Icon on Download
Preview
Content: Accepted Version
Filetype: PDF
Size: 409kB
View at publisher
Preview Icon on Download
Content: Published Version
Filetype: PDF - Registered users only
Size: 718kB