Small Business, Innovation, and Tax Policy: A Review

46 Pages Posted: 19 Jul 2014

See all articles by William G. Gale

William G. Gale

Brookings Institution

Samuel Brown

Brookings Institution

Date Written: April 8, 2013

Abstract

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

Gale, William G. and Brown, Samuel, Small Business, Innovation, and Tax Policy: A Review (April 8, 2013). Available at SSRN: https://ssrn.com/abstract=2467620 or http://dx.doi.org/10.2139/ssrn.2467620

William G. Gale (Contact Author)

Brookings Institution ( email )

1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
202-797-6148 (Phone)
202-797-6181 (Fax)

Samuel Brown

Brookings Institution ( email )

1775 Massachusetts Ave, NW
Washington, DC 20036
United States

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