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Tax Policy for Venture Capital Backed Entrepreneurship

University of St. Gallen Economics Discussion Paper No. 2008-07

40 Pages Posted: 2 Apr 2008 Last revised: 25 Oct 2014

Christian Keuschnigg

University of St. Gallen - Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)

Date Written: March 2008

Abstract

Venture capital has become an important source of financing young entrepreneurial firms. Venture capital backed firms are often perceived as more innovative and as creating more value than others. Perhaps for this reason, policy makers are keen to create a good institutional framework to facilitate the development of an active venture capital industry. We explore the role of tax policy in determining the incentives of individuals to start up new firms and of venture capitalists to finance and advise them. In particular, we examine how business taxation at the company and investor level together with start-up capital subsidies affect the volume and quality of venture capital backed entrepreneurship.

Keywords: Entrepreneurship, venture capital, taxes, subsidies

JEL Classification: D82, G24, H24, H25

Suggested Citation

Keuschnigg, Christian, Tax Policy for Venture Capital Backed Entrepreneurship (March 2008). University of St. Gallen Economics Discussion Paper No. 2008-07. Available at SSRN: https://ssrn.com/abstract=1115822 or http://dx.doi.org/10.2139/ssrn.1115822

Christian Keuschnigg (Contact Author)

University of St. Gallen - Department of Economics (FGN-HSG) ( email )

Varnbuelstrasse 19
St. Gallen, CH-9000
Switzerland
+41 71 224 3085 (Phone)
+41 71 224 2874 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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