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Death And Taxes: The Impact Of Progressive Taxation On Health

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  • Anca Cotet

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    (Department of Economics, Ball State University)

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    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://econfac.iweb.bsu.edu/research/workingpapers/bsuecwp200903cotet.pdf
    File Function: First version, 2009
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    Bibliographic 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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    Keywords: Tax Progressivity; Labor Income Tax; Health Investment.;

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    1. 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.
    2. 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.
    3. Case, Anne & Paxson, Christina, 2001. "Mothers and others: who invests in children's health?," Journal of Health Economics, Elsevier, vol. 20(3), pages 301-328, May.
    4. Kenkel, D.S., 1988. "Health Behavior, Health Knowledge, And Schooling," Papers 10-88-3, Pennsylvania State - Department of Economics.
    5. Anne Case & Darren Lubotsky & Christina Paxson, 2001. "Economic Status and Health in Childhood: The Origins of the Gradient," NBER Working Papers 8344, National Bureau of Economic Research, Inc.
    6. Kevin M. Murphy & Robert H. Topel, 2006. "The Value of Health and Longevity," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 871-904, October.
    7. Christopher J. Ruhm, 2000. "Are Recessions Good For Your Health?," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 617-650, May.
    8. Darius Lakdawalla & Tomas Philipson, 2002. "The Growth of Obesity and Technological Change: A Theoretical and Empirical Examination," Working Papers 0203, Harris School of Public Policy Studies, University of Chicago.
    9. Sandmo, Agnar, 1983. " Progressive Taxation, Redistribution, and Labor Supply," Scandinavian Journal of Economics, Wiley Blackwell, vol. 85(3), pages 311-23.
    10. 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.
    11. Ippolito, Richard A., 1985. "Income tax policy and lifetime labor supply," Journal of Public Economics, Elsevier, vol. 26(3), pages 327-347, April.
    12. John Strauss & Paul J. Gertler & Omar Rahman & Kristin Fox, 1993. "Gender and Life-Cycle Differentials in the Patterns and Determinants of Adult Health," Journal of Human Resources, University of Wisconsin Press, vol. 28(4), pages 791-837.
    13. Martin Feldstein & Daniel R. Feenberg, 1996. "The Taxation of Two-Earner Families," NBER Chapters, in: Empirical Foundations of Household Taxation, pages 39-75 National Bureau of Economic Research, Inc.
    14. Nico A. Hansen & Anke S. Kessler, 2001. "The Political Geography of Tax H(e)avens and Tax Hells," American Economic Review, American Economic Association, vol. 91(4), pages 1103-1115, September.
    15. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
    16. 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.
    17. 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.
    18. Janet C. Hunt & Charles D. DeLorme & Jr & R. Carter Hill, 1981. "Taxation and the wife's use of time," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 34(3), pages 426-432, April.
    19. Michael Grossman, 1972. "The Demand for Health: A Theoretical and Empirical Investigation," NBER Books, National Bureau of Economic Research, Inc, number gros72-1, octubre-d.
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    1. Astmeline tulumaks ja tulude ebavõrdsus
      by Alari in Praxise mõttehommik on 2009-03-05 20:56:00

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