Tax Burden Reduction and Simplification: An Application of Regression Discontinuity Design to the Brazilian Industry

Posted: 17 May 2017 Last revised: 29 May 2017

Cleiton Franco

Universidade do Estado de Mato Grosso; Universidade Estadual de Mato Grosso

Gustavo Ramos Sampaio

University of Illinois at Urbana-Champaign

Paulo Henrique Vaz

Universidade Federal de Pernambuco - Departamento de Economia

Date Written: May 16, 2017

Abstract

Small businesses are important to the economic growth of developing countries. The paper evaluates the causal effect of reducing bureaucracy and the tax burden on small manufacturing firms in Brazil. The identification explored the discontinuity among firms next to the eligibility threshold associated with the Simples Nacional program. Microdata from the Annual Industrial Survey (PIA) were used for the period 2000 to 2012. Results suggest that companies participating in the program have reduced the industrial operating cost by 23%, increased job creation in 21.5% and payroll in 25.18%.

Keywords: Tax Reduction; Simples Nacional Program; Brazilian Industry Performance; Regression Discontinuity Design

JEL Classification: D22; K34; L25

Suggested Citation

Franco, Cleiton and Sampaio, Gustavo Ramos and Vaz, Paulo Henrique, Tax Burden Reduction and Simplification: An Application of Regression Discontinuity Design to the Brazilian Industry (May 16, 2017). Available at SSRN: https://ssrn.com/abstract=2969041 or http://dx.doi.org/10.2139/ssrn.2969041

Cleiton Franco (Contact Author)

Universidade do Estado de Mato Grosso ( email )

Av. Ingás, 3001 - Jardim Imperial
Sinop, MT 78550124
Brazil

Universidade Estadual de Mato Grosso ( email )

Rod MT 358, km 7
jardim aeroporto
tangara da serra, Mato Grosso 78300-000
Brazil

Gustavo Ramos Sampaio

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Paulo Henrique Vaz

Universidade Federal de Pernambuco - Departamento de Economia ( email )

Cidade Universitaria
Recife-PE 50670-901
Brazil

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