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Optimal Tax Deductions for Net Losses Under Private Insurance With an Upper Limit

  • Rachel J. Huang
  • Larry Y. Tzeng

Kaplow (1992b) shows that governments should not provide a tax deduction for net losses when a private insurance contract is available. However, his findings rest on the assumption that the private insurance is proportional coverage. We find that Kaplow's conclusions may not hold when the private insurance contract contains an upper limit. The findings of our article show that Kaplow's conclusions are sensitive to the assumption that the insurance contract is available in the private market. Copyright The Journal of Risk and Insurance, 2007.

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Article provided by The American Risk and Insurance Association in its journal Journal of Risk & Insurance.

Volume (Year): 74 (2007)
Issue (Month): 4 ()
Pages: 883-893

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Handle: RePEc:bla:jrinsu:v:74:y:2007:i:4:p:883-893
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  12. Louis Kaplow, 1991. "The Income Tax as Insurance: The Casualty Loss and Medical Expense Deductions and the Exclusion of the Medical Insurance Premiums," NBER Working Papers 3723, National Bureau of Economic Research, Inc.
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