Donald Bruce and Mohammed Mohsin have a new article out in Small Business Economics on tax policy and entrepreneurship (as measured by self-employment).* They find that while taxes do affect the level of entrepreneurship, it would require a fairly large tax change to have any noticeable impact on self-employment. They therefore conclude that "our results indicate that tax policies in isolation are not good instruments for generating changes in the level of entrepreneurial activity."

*Donald Bruce and Mohammed Mohsin, "Tax Policy and Entrepreneurship: New Time-Series Evidence," Small Business Economics 26 (2006): 409-425.