The Scope Taxation in Influencing Entrepreneurship: Historical Overview of Tax Policies

Abstract

Policymakers constantly face the challenge of aligning micro- and macroeconomic policies with the existing needs of the social, political and economic facets of their areas of jurisdiction. Given the pivotal role played by taxation in any economy, it is not surprising that many countries often turn to tax breaks as a method of easing pressure on existing enterprises with the hope of sparking investment. One common explanation for issuing such breaks is that taxation affects microeconomic decisions undertaken by organizations in terms of investments, innovation and job creation and policies of the existing tax regime directly affect opportunities for enterprises that may seek to venture beyond the boundaries of a taxation authority’s area of jurisdiction. However, empirically, the world of entrepreneurship is difficult to analyze. This is especially true when identifying the relationship between tax- promoted economic activities of entrepreneurs and the overall behavior of different businesses. This paper reviews the scope of taxation within the US’s economic policy through a historical analysis of the manner in which the Bush, Obama and Trump administrations utilized policy tools to shape the course of the country’s micro- and macro-economic conditions.