TY - JOUR
T1 - Income taxes and entrepreneurs' use of labor
AU - Carroll, Robert
AU - Holtz-Eakin, Douglas
AU - Rider, Mark
AU - Rosen, Harvey S.
N1 - Copyright:
Copyright 2017 Elsevier B.V., All rights reserved.
PY - 2000/4
Y1 - 2000/4
N2 - We investigate the effect of entrepreneurs' personal taxes on their use of labor, analyze the tax returns of sole proprietors before and after the Tax Reform Act of 1986, and determine how the substantial reductions in marginal tax rates affected their hiring decisions and wage bills. Individual income taxes exert a statistically and quantitatively significant influence on the probability of hiring workers. Raising the entrepreneur's "tax price" by 10% raises the mean probability of hiring by about 12%. Further, taxes influence total wage payments to workers. The tax-price elasticity of the median wage bill is about .37.
AB - We investigate the effect of entrepreneurs' personal taxes on their use of labor, analyze the tax returns of sole proprietors before and after the Tax Reform Act of 1986, and determine how the substantial reductions in marginal tax rates affected their hiring decisions and wage bills. Individual income taxes exert a statistically and quantitatively significant influence on the probability of hiring workers. Raising the entrepreneur's "tax price" by 10% raises the mean probability of hiring by about 12%. Further, taxes influence total wage payments to workers. The tax-price elasticity of the median wage bill is about .37.
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U2 - 10.1086/209961
DO - 10.1086/209961
M3 - Article
AN - SCOPUS:0034414224
VL - 18
SP - 324
EP - 351
JO - Journal of Labor Economics
JF - Journal of Labor Economics
SN - 0734-306X
IS - 2
ER -