The importance of taxes in entrepreneurial decisions: an analysis of practicing physicians’ behavior

Hundsdoerfer, Jochen; Sichtmann, Christina

doi:10.1007/s11846-008-0023-0

“…In Ref [31]'s experiments, individuals assumed the average tax rates 'as if' they were the marginal tax rates, and tended to be confused when the marginal tax rates were less explicit. Additionally, in the tax psychology literature, some of the prior studies emphasize that individuals overestimate their marginal tax rates (e.g., [32,33]).…”

Section: Tax Ratesmentioning

confidence: 99%

Tax Progressivity and Entrepreneurial Dynamics

Nadirov

¹

,

Dehning

²

2020

Sustainability

3

0

View full text Add to dashboard Cite

This study examines how tax progressivity affects entrepreneurial dynamics in 18 countries. The results show that increased downside progressivity has a positive influence on the transition rate from nascent entrepreneurship to established business ownership. In addition, only downside progressivity calculated using marginal tax rates is related to the transition ratio, implying that it is marginal tax rates, and not average tax rates, that are used in the entrepreneurial decision-making process. This paper contributes to our understanding of entrepreneurial dynamics and the effect of tax progressivity on the transition from nascent entrepreneurship to established business ownership.

show abstract

“…As a means of comparison, the part-worth utilities of the attributes could also be measured for a rational maximizer of consumption utility who ranks the stimuli solely according to the attainable net pay (Hundsdoerfer and Sichtmann 2009). In this way in can be tested whether test persons assign a systematically higher value to the attribute trait "education allowance is levied" as would be the case in the rational model.…”

Section: Education Allowancementioning

confidence: 99%

The Name Game for Contributions – Influence of Labeling and Earmarking on the Perceived Tax Burden

Hundsdoerfer

¹

,

Sielaff

²

,

Blaufus

³

et al. 2010

Self Cite

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractIn this paper we apply conjoint analysis as an empirical method to study the influence of tax labeling and tax earmarking on the perceived tax burden. As reference for the individual behavior we use the model of a rational utility maximizer described by the economic theory.We determine a significant influence of the labeling and the earmarking of taxes. We can show that the labeling and earmarking effect can decrease the perceived tax burden for the test persons which results in a deviation from a (rational) consumption maximizing behavior.These results give important implications for tax policy regarding further reforms of the tax and contribution system. IntroductionIn tax effects theory it is commonly assumed that taxpayers aim to maximize their consumption utility and with it -in a given labor supply -their net income. This assumption also implies the sub goal of taxpayers, namely to minimize their tax burden (in general: their contribution burden) in order to reach the largest possible consumption potential.Particularly studies on the willingness to evade taxes have shown that this neoclassical assumption is not always fulfilled in reality (Jonas, Heine, and Frey 1999 pp. 164ff. with further references). Many taxpayers seem to attach a positive utility to taxes and further contributions, as long as these contributions are consistent with their own sense of fairness and they find the contributions reasonable. Therefore attributes of a contribution such as its labeling can influence the individual evaluation of this duty and the subjective perceived This article is structured as follows: In section 2 we will first present a literature review of this topic, and then subsequently in section 3 we will derive our hypotheses on the behavior of 3 taxpayers in the selection of a specific combination of contributions. Section 4 describes the sample, the method of the conjoint analysis, the concrete research design, and the results of the study. In section 5 we will discuss the results as well as elaborate upon possible explanations. Section 6 presents our conclusions and topics for further research. Literature ReviewThe starting point in modern public finance of the tax earmarking discussion is Buchanan

show abstract

“…In terms of method, we use conjoint analysis, which is a well-established marketing research method. Thus far this method has only been applied to tax questions by Milliron und Toy (1988); Blaufus und Ortlieb (2009) ;Hundsdoerfer und Sichtmann (2009).…”

Section: Literature Reviewmentioning

confidence: 99%

“…However, some studies have also found that marginal tax rates are overestimated (e.g. Rupert und Fischer , 1995;Hundsdoerfer und Sichtmann , 2009).…”

Section: Literature Reviewmentioning

confidence: 99%

It's All About Tax Rates: An Empirical Study of Tax Perception

Blaufus

¹

,

Bob

²

,

Hundsdoerfer

³

et al. 2009

SSRN Journal

Self Cite

4

0

View full text Add to dashboard Cite

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. In this paper we apply conjoint analysis to study the influence of changes in the tax rate and the tax base on the perceived tax burden. Our results show that the majority of individuals do not make rational tax decisions based on the actual tax burden, but rather use simple decision heuristics. This leads to the importance of the tax rate being significantly overestimated and the importance of the tax base being significantly underestimated. Furthermore we determine framing effects and show that under specific assumptions, a rise in the actual tax burden can lead to a electoral success. Terms of use: Documents in EconStor may

show abstract

The importance of taxes in entrepreneurial decisions: an analysis of practicing physicians’ behavior

Abstract: Tax, Rational behavior, Conjoint analysis, Utility maximization, H20, H31,

Cited by 19 publications

References 38 publications

Tax Progressivity and Entrepreneurial Dynamics

Tax Progressivity and Entrepreneurial Dynamics

The Name Game for Contributions – Influence of Labeling and Earmarking on the Perceived Tax Burden

It's All About Tax Rates: An Empirical Study of Tax Perception

Contact Info

Product

Resources

About