NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

NBER Working Papers by Robert Carroll

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Working Papers

October 2000Personal Income Taxes and the Growth of Small Firms
with Douglas Holtz-Eakin, Mark Rider, Harvey S. Rosen: w7980
This paper investigates the effect of entrepreneurs' personal income tax situations on the growth rates of their enterprises. We analyze the personal income tax returns of a large number of sole proprietors before and after the Tax Reform Act of 1986 and determine how the substantial reductions in marginal tax rates associated with that law affected the growth of their firms as measured by gross receipts. We find that individual income taxes exert a statistically and quantitatively significant influence on firm growth rates. Raising the sole proprietor's tax price (one minus the marginal tax rate) by 10 percent increases receipts by about 8.4 percent. This finding is consistent with the view that raising income tax rates discourages the growth of small businesses.

Published: Personal Income Taxes and the Growth of Small Firms, Robert Carroll, Douglas Holtz-Eakin, Mark Rider, Harvey S. Rosen. in Tax Policy and the Economy, Volume 15, Poterba. 2001

May 2000Income Taxes and Entrepreneurs' Use of Labor
with Douglas Holtz-Eakin, Mark Rider, Harvey S. Rosen: w6578
This paper investigates the effect of entrepreneurs' personal income tax situations on their use of labor. We analyze the income tax returns of a large number of sole proprietors before and after the Tax Reform Act of 1986 and determine how the substantial reductions in marginal tax rates associated with that law affected their decisions to hire labor and the size of their wage bills. We find that individual income taxes exert a statistically and quantitatively significant influence on the probability that an entrepreneur hires workers. Raising the entrepreneur's tax price' (one minus the marginal tax rate) by 10 percent raises the mean probability of hiring workers by about 12 percent. Further, conditional on hiring employees, taxes also influence the total wage payments to those wor...

Published: Journal of Labor Economics, vol. 18, no. 2, pp. 324-351, 1999.

January 1998Entrepreneurs, Income Taxes, and Investment
with Douglas Holtz-Eakin, Mark Rider, Harvey S. Rosen: w6374
This paper investigates the effect of entrepreneurs' personal income tax situations on their capital investment decisions. We examine the income tax returns of a sample of sole proprietors before and after the Tax Reform Act of 1986 and determine how the substantial reductions in marginal tax rates for the relatively affluent associated with that law affected their decisions to invest in physical capital. We find that individual income taxes exert a statistically and quantitatively significant influence on investment decisions. In our sample increase in marginal tax rates would reduce the proportion of entrepreneurs who make new capital investments by 10.4 percent, and decrease mean investment expenditures by 9.9 percent.

Published: Carroll, Robert, Douglas Holtz-Eakin, Mark Rider and Harvey S. Rosen. "Income Taxes And Entrepreneurs' Use Of Labor," Journal of Labor Economics, 2000, v18(2,Apr), 324-351.

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