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Death And Taxes: The Impact Of Progressive Taxation On Health

Author

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  • Anca Cotet

    (Department of Economics, Ball State University)

Abstract

More progressive taxes, holding tax liability constant, generate disincentives for health investment by decreasing benefits for additional working time and, thus, decreasing returns to health. On the other hand, progressive taxation may induce individuals to invest more in health for the purpose of extending their working life, because lifetime maximization could imply less work per period but more working years. I identify the effect of progressivity through differences in labor income tax rates among states. I find that the former effect dominates, more progressive taxes are negatively correlated with health, and argue that neither selection effects nor reverse causality can explain this result.

Suggested Citation

  • Anca Cotet, 2009. "Death And Taxes: The Impact Of Progressive Taxation On Health," Working Papers 200903, Ball State University, Department of Economics, revised Mar 2009.
    • Handle: RePEc:bsu:wpaper:200903
    as

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    File URL: http://econfac.bsu.edu/research/workingpapers/bsuecwp200903cotet.pdf
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    References listed on IDEAS

    as
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    1. Astmeline tulumaks ja tulude ebavõrdsus
      by Alari in Praxise mõttehommik on 2009-03-06 02:56:00

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    More about this item

    Keywords

    Tax Progressivity; Labor Income Tax; Health Investment.;
    All these keywords.

    JEL classification:

    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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