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Taxation and public policy towards small firms: a review

Published on 01 Oct 07 by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE

The favourable tax treatment of the self-employed and SMEs can only be justified on efficiency grounds if there is evidence that they provide spillover (external) effects to the rest of the economy that are not fully captured by these small “firms”. However, many countries have incomplete integration between personal and corporate tax systems. The resulting non-neutral tax structures are often inefficient, distorting the allocation of resources. Consequently, policy makers need to design tax policies for entrepreneurship to remedy market failures, while avoiding adverse side-effects. The paper concludes with suggestions about the characteristics of an optimal small business tax system.

Author profiles:

Brian SLOAN
Brian Sloan is a Doctoral Researcher at Manchester Business School
Current at October 2007

 
Francis CHITTENDEN
is ACCA Professor of Small Business Finance at Manchester Business School
Current at October 2007
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