Small Business, Innovation, and Tax Policy: A Review
46 Pages Posted: 19 Jul 2014
Date Written: April 8, 2013
Small businesses occupy an iconic place in American public policy debates. This paper discusses interactions between the federal tax code, small business, and the economy. We summarize the characteristics of small businesses, identify the tax provisions that most affect small businesses, and review evidence on the impact of tax and other policies on entrepreneurial activity. We also examine evidence suggesting that it is young firms, not small ones, where job growth and innovation tend to occur. Policies that aim to stimulate young and innovative firms are likely to prove different than policies that subsidize small businesses.
Keywords: small business, entrepreneurship, innovation, tax policy
JEL Classification: H2, M13
Suggested Citation: Suggested Citation