Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
This paper explores unique administrative data on the universe of firms under a simplified tax regime (SN) in a representative Brazilian state. We investigate micro-entrepreneurs revenue response to a reduced tax rate, up to 3.3 p.p. for smaller firms. Our preferred results show an excess mass of 735 (295%) firms bunching at the tax reduction eligibility threshold, resulting in an estimated elasticity of business income with respect to the net-of-taxes of 0.015. Firms whose revenues are close to the thresholds are associated with a larger probability to report positive revenue in the subsequent year (1.8%), however, most of these firms are no longer active.