The effect of a progressive income tax system on entrepreneurial activity: Evidence from Ireland

This paper portrays the effect of the Irish income tax system on entrepreneurial activity in the country. The purpose of the report was to determine whether tax progressivity has a negative effect on entrepreneurial activity. In addition, the paper aims to determine whether the elevated progressivity of the Irish tax system is hampering the performance of start-up companies. In order to do this, an extensive literature review led to arguing for the over-progressivity of the Irish income tax system, which allowed to develop a hypothesis. This hypothesis was then tested through a quantitative study which aimed to analyse the influence of income tax progressivity on entrepreneurial activity. The study was based on data from fifteen European countries, and the findings displayed a negative relationship between tax progressivity and entrepreneurial activity. Finally, the study addresses the common concern of excessive taxation among Irish entrepreneurs