Publication Type

Journal Article

Version

submittedVersion

Publication Date

6-2019

Abstract

We investigate the extent to which uncertainties about tax policies affect business activities. We develop a statewide tax-uncertainty measure (TU measure) and show that it captures state corporate tax uncertainty. By comparing adjacent counties across state borders, we show that increasing tax uncertainty by one standard deviation (a 30% increase in the TU measure) leads to a 0.17% point per-year decrease in the growth rate of establishments over two years. The result holds after conducting a variety of robustness checks and is not likely to be driven by general state-policy uncertainties.

Keywords

Entrepreneurship, State government, Uncertainty

Discipline

Behavioral Economics | Industrial Organization | Taxation

Research Areas

Applied Microeconomics

Publication

Journal of Economic Dynamics and Control

Volume

103

First Page

158

Last Page

184

ISSN

0165-1889

Identifier

10.1016/j.jedc.2018.09.013

Publisher

Elsevier: 24 months

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1016/j.jedc.2018.09.013

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