Resource title

Tax neutrality: illusion or reality?: the case of entrepreneurship

Resource image

image for OpenScout resource :: Tax neutrality: illusion or reality?: the case of entrepreneurship

Resource description

This paper shows that taxes which are understood to be neutral with respect to the marginal investment decisions may be distortionary with respect to entrepreneurial decisions. In particular, we apply an intertemporal model to show that a comprehensive income tax is distortionary unless all kinds of income are subject to the same tax rate and a worker's option to become an entrepreneur is accounted for. Similarly, the harsh condition of a uniform tax rate is necessary but not sufficient under new view dividend tax, cash flow tax, and ACE tax, so that the occupational choice is not distorted. In any case, informational problems may arise and lead to distortive effects.

Resource author

Vesa Kanniainen, Paolo M. Panteghini

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/26351

Resource license

Adapt according to the presented license agreement and reference the original author.