County Fiscal Policy and Entrepreneurship: The Impact of Occupational License Taxes on Business Startups
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In this paper, we create a model of business startup decisions by utility maximizing individuals to determine the impact of county occupational license taxes on business startups. We utilize a unique dataset generated by the Kentucky Entrepreneurship Survey which allows us to observe personal traits of entrepreneurs, each year a startup was established, and the entrepreneurs’ perception of the entrepreneurial culture of each county. Controlling for relevant factors, we find that county-level occupational license taxes do not significantly impact the decision of entrepreneurs to start a business. We do, however, find strong evidence that other factors such as community culture influence startup decisions.