Tax Policy for Venture Capital Backed Entrepreneurship
University of St. Gallen - Department of Economics (FGN-HSG); CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR)
University of St. Gallen Economics Discussion Paper No. 2008-07
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.
Number of Pages in PDF File: 40
Keywords: Entrepreneurship, venture capital, taxes, subsidies
JEL Classification: D82, G24, H24, H25
Date posted: April 2, 2008 ; Last revised: October 25, 2014