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Taxation and Self-Employment

Abstract : In this paper I study the relation between self-employment and the tax rates on wages and on self-employment income. Using variation in the statutory tax rates across countries, industries, and occupations, I find that while the share of self-employed is strongly positively correlated with the tax rate on wage income, it is weakly negatively correlated with the tax rate on self-employed income. The asymmetry between the effects of the tax rates suggests that those who choose self-employment partly do so in order to evade taxes. This extensive margin of adjustment – between employment and self-employment – should be taken into account when considering the effects of tax rates on labor income, on taxable income and on welfare.
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Preprints, Working Papers, ...
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https://hal-sciencespo.archives-ouvertes.fr/hal-03393144
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Submitted on : Thursday, October 21, 2021 - 9:40:30 PM
Last modification on : Monday, March 21, 2022 - 2:47:48 PM
Long-term archiving on: : Saturday, January 22, 2022 - 9:17:23 PM

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Zsofia Barany. Taxation and Self-Employment. 2018. ⟨hal-03393144⟩

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