The Effects of the 1986 and 1993 Tax Reforms on Self-Employment

47 Pages Posted: 26 May 2004

See all articles by Kevin B. Moore

Kevin B. Moore

Board of Governors of the Federal Reserve System

Date Written: February 2004

Abstract

This paper adds a new dimension to the literature that uses individual level data to assess the effects of tax policy on self-employment. Specifically, this study uses repeated cross-section data from the Surveys of Consumer Finances (SCF) against the background of the tax reforms of 1986 and 1993 to gauge the influence of taxes on self-employment. Using the 1986 and 1993 tax rate reforms as natural experiments allows for the identification of the effect of taxes on the choice to become self-employed. The findings of this paper indicate that marginal and average tax rates are negatively related to the propensity to become self-employed. However, these effects are only significant for the 1986 tax reforms and are sensitive to the model specification. Other factors, such as education, industry, wealth, and attitude toward risks, are consistently more important influences on the choice to become self-employed.

Keywords: Self-employment, marginal tax rates, average tax rates

JEL Classification: J23, H24

Suggested Citation

Moore, Kevin B., The Effects of the 1986 and 1993 Tax Reforms on Self-Employment (February 2004). FEDS Working Paper No. 2004-05. Available at SSRN: https://ssrn.com/abstract=515144 or http://dx.doi.org/10.2139/ssrn.515144

Kevin B. Moore (Contact Author)

Board of Governors of the Federal Reserve System ( email )

20th Street and Constitution Avenue NW
Washington, DC 20551
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
102
Abstract Views
1,205
rank
267,703
PlumX Metrics