This thesis investigates how features of the tax system influence the behavior of business owners and their firms. The first chapter examines how differential taxation of personal and corporate income impacts firms’ legal form choice. The second chapter explores how closely held corporations and their owners respond to corporate tax incentives. Specifically, it investigates the main channels of adjustment, the main predictors of responsiveness, persistence in firms’ and director-owners’ behavior, and the link between personal and corporate taxable income optimization. Finally, the third chapter studies the effect of a fiscal stimulus policy that temporarily changed loss carry-back rules on small and medium corporations’ survival, employment, investments, and profits.