Taxation, Innovation and Entrepreneurship

Autor: Ulrich Schetter, Maik T. Schneider, Hans Gersbach
Rok vydání: 2018
Předmět:
Zdroj: Gersbach, H, Schetter, U & Schneider, M 2019, ' Taxation, Innovation, and Entrepreneurship ', The Economic journal, vol. 129, no. 620, pp. 1731-1781 . https://doi.org/10.1111/ecoj.12588
Economics Working Paper Series, 14/206
ISSN: 1468-0297
0013-0133
Popis: We explore optimal and politically feasible growth policies in the form of basic research investments and taxation. Basic research is a public good that benefits innovating entrepreneurs, but its provision and financing also affect the entire economy – in particular, occupational choices of potential entrepreneurs, wages, dividends, and aggregate output. We show that the impact of basic research on the general economy rationalizes a taxation pecking order to finance basic research. More specifically, in a society with desirably dense entrepreneurial activity, a large share of funds for basic research should be financed by labor taxation, while a minor share should be left to profit taxation. Such tax schemes will induce a significant proportion of agents to become entrepreneurs, thereby rationalizing substantial investments in basic research that fosters their innovation prospects. These entrepreneurial economies, however, may make a majority of workers worse off, giving rise to a conflict between efficiency and equality. We discuss ways of mitigating this conflict and thus strengthening the political support for growth policies.
Economics Working Paper Series, 14/206
Databáze: OpenAIRE
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