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Death And Taxes: The Impact Of Progressive Taxation On Health

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Author Info
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.

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File URL: http://web.bsu.edu/cob/econ/research/papers/bsuecwp200903cotet.pdf
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File Function: First version, 2009
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Publisher Info
Paper provided by Ball State University, Department of Economics in its series Working Papers with number 200903.

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Length: 36 pages
Date of creation: Mar 2009
Date of revision: Mar 2009
Handle: RePEc:bsu:wpaper:200903

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Related research
Keywords: Tax Progressivity; Labor Income Tax; Health Investment.;

Find related papers by JEL classification:
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
I12 - Health, Education, and Welfare - - Health - - - Health Production
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving

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  6. Sandmo, Agnar, 1983. " Progressive Taxation, Redistribution, and Labor Supply," Scandinavian Journal of Economics, Blackwell Publishing, vol. 85(3), pages 311-23.
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  8. Ippolito, Richard A., 1985. "Income tax policy and lifetime labor supply," Journal of Public Economics, Elsevier, vol. 26(3), pages 327-347, April. [Downloadable!] (restricted)
  9. Pencavel, John, 1987. "Labor supply of men: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 1, pages 3-102 Elsevier. [Downloadable!] (restricted)
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  11. Killingsworth, Mark R. & Heckman, James J., 1987. "Female labor supply: A survey," Handbook of Labor Economics, in: O. Ashenfelter & R. Layard (ed.), Handbook of Labor Economics, edition 1, volume 1, chapter 2, pages 103-204 Elsevier. [Downloadable!] (restricted)
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  13. Michael Baker & Mark Stabile & Catherine Deri, 2001. "What do Self-Reported, Objective, Measures of Health Measure?," NBER Working Papers 8419, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Eissa, Nada & Hoynes, Hilary Williamson, 2004. "Taxes and the labor market participation of married couples: the earned income tax credit," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 1931-1958, August. [Downloadable!] (restricted)
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  16. William M. Gentry & R. Glenn Hubbard, 2002. "The Effects of Progressive Income Taxation on Job Turnover," NBER Working Papers 9226, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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