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Wednesday, March 09, 2005

Taxes Do Matter

The Entrepreneurial Mind quotes from a recent report from the SBA Office of Advocacy:

Reducing marginal income tax rates on entrepreneurs increases entrepreneurial entry, decreases exit from entrepreneurship, and lengthens the duration of entrepreneurial ventures.
Click here for the whole post (and a link to the report).

On of the central themes in finance is that taxes matter. A lower marginal tax rate means that after tax payoffs increase. Not surprisingly, this shifts investor/entrepeneur behavior at the margin. Given the increasing importance of entrepreneurial activity as an engine of economic growth, this is pretty important as a policy issue.

Don't you love it when real world data supports what theory says?

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