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Taxes and Fringe Benefits Offered by Employers

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  • William M. Gentry
  • Eric Peress

Abstract

Using cross-sectional data for blue and white collar workers for U.S. cities, we examine how the tax treatment of fringe benefits affects whether employers offer benefits. Differences in state-level income taxes cause variation across places in the tax incentives for fringe benefits. We find that employers respond to tax incentives to offer fringe benefits, especially to blue collar workers. The tax incentives affect both the probability of basic benefits, such as medical coverage, and more 'marginal' benefits, such as vision and dental coverage. Higher taxes also reduce the amount of explicit cost sharing for some benefits between employers and employees.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4764.

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Date of creation: Jun 1994
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Handle: RePEc:nbr:nberwo:4764

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References

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  1. Stephen A. Woodbury & Daniel S. Hamermesh, . "Taxes, Fringe Benefits, and Faculty," Upjohn Working Papers and Journal Articles saw1992, W.E. Upjohn Institute for Employment Research.
  2. Bogart, William T & Gentry, William M, 1995. "Capital Gains Taxes and Realizations: Evidence from Interstate Comparisons," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 267-82, May.
  3. Feldstein, Martin & Friedman, Bernard, 1977. "Tax subsidies, the rational demand for insurance and the health care crisis," Journal of Public Economics, Elsevier, vol. 7(2), pages 155-178, April.
  4. Turner, Robert W., 1987. "Taxes and the number of fringe benefits received," Journal of Public Economics, Elsevier, vol. 33(1), pages 41-57, June.
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Cited by:
  1. Finkelstein, Amy, 2002. "The effect of tax subsidies to employer-provided supplementary health insurance: evidence from Canada," Journal of Public Economics, Elsevier, vol. 84(3), pages 305-339, June.
  2. Bernheim, B. Douglas, 2002. "Taxation and saving," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 3, chapter 18, pages 1173-1249 Elsevier.
  3. Dizioli, Allan & Pinheiro, Roberto B., 2012. "Health insurance as a productive factor," MPRA Paper 39743, University Library of Munich, Germany.
  4. Mark Stabile, 2002. "The Role of Tax Subsidies in the Market for Health Insurance," International Tax and Public Finance, Springer, vol. 9(1), pages 33-50, January.
  5. Louise Sheiner, 1999. "Health care costs, wages, and aging," Finance and Economics Discussion Series 1999-19, Board of Governors of the Federal Reserve System (U.S.).
  6. Juurikkala, Tuuli & Lazareva, Olga, 2006. "Non-wage benefits, costs of turnover, and labor attachment: Evidence from Russian firms," BOFIT Discussion Papers 4/2006, Bank of Finland, Institute for Economies in Transition.
  7. Dwight Lee & Ronald Warren, 1999. "Mandated health insurance and the low-wage labor market," Journal of Labor Research, Springer, vol. 20(4), pages 505-515, December.
  8. David M. Cutler, 2003. "Employee Costs and the Decline in Health Insurance Coverage," NBER Chapters, in: Frontiers in Health Policy Research, Volume 6, pages 27-54 National Bureau of Economic Research, Inc.
  9. Jonathan Gruber & Michael Lettau, 2000. "How Elastic is the Firm's Demand for Health Insurance?," NBER Working Papers 8021, National Bureau of Economic Research, Inc.
  10. Mark Stabile, 1999. "Tax Subsidies And The Provision Of Health Insurance In Small Firms," Working Papers mstabile-99-01, University of Toronto, Department of Economics.
  11. Jonathan Gruber, 2001. "Taxes and Health Insurance," NBER Working Papers 8657, National Bureau of Economic Research, Inc.
  12. Gruber, Jonathan, 2011. "The Tax Exclusion For Employer-Sponsored Health Insurance," National Tax Journal, National Tax Association, vol. 64(2), pages 511-30, June.

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