Corporate income taxes and entrepreneurship

Empirical evidence shows that corporate income taxation has a significant, albeit small, influence on the quantity and type of entrepreneurship. In addition to the corporate income tax level, tax progressivity and tax code complexity exhibit effects on entrepreneurship. Policymakers must understand the nuances of how corporate income taxation affects entrepreneurship, and must consider contextual factors such as the quality of accounting systems and investors' risk profiles before determining tax policy. For policymakers in countries with low-quality accounting standards, this suggests that lowering taxes to increase entrepreneurship rates should be accompanied with an effort to improve the quality of accounting standards.