Taxes and Supply of Labor by Entrepreneurs

Authors

  • Sanjay Paul Associate Professor of Economics Department of Business Elizabethtown College Elizabethtown, PA, USA
  • Ademar Bechtold Department of Business and Economics Notre Dame of Maryland University Baltimore, MD 21210, USA

DOI:

https://doi.org/10.14738/assrj.21.826

Keywords:

Entrepreneurship, Tax, Progressivity, Interest rates, Productivity.

Abstract

We develop a model of entrepreneurship in which an individual allocates time between salaried work (which pays a certain income) and entrepreneurial activity (which yields an uncertain income). The individual pays taxes on both incomes; however we allow for deductibility of interest. We derive the effects of changing tax rates on the supply of labor to the salaried job market and the supply of labor to the entrepreneurial activity. We also investigate the effects of differential sectoral productivity and differing income tax rates on entrepreneurship.

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Published

2015-01-28

How to Cite

Paul, S., & Bechtold, A. (2015). Taxes and Supply of Labor by Entrepreneurs. Advances in Social Sciences Research Journal, 2(1). https://doi.org/10.14738/assrj.21.826