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Limiting the Tax Exclusion for Employmentbased Health Insurance: Are Improved Equity and Efficiency Enough?


  • Pauly, Mark V.


Removal or limitation of the current exclusion of employment-related health benefit payments from taxable income would improve economic efficiency and equity, but is this sufficient to make such a policy change likely? This paper uses some concepts from public choice theory, based on earlier work by Buchanan and Pauly on the incidence of tax deductibility, to suggest that such a change is more likely in the current context of broader tax reform involving a desire to reform the functioning of the health insurance market and to increase the tax share of upper middle income households.

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  • Pauly, Mark V., 2009. "Limiting the Tax Exclusion for Employmentbased Health Insurance: Are Improved Equity and Efficiency Enough?," National Tax Journal, National Tax Association, vol. 62(3), pages 555-562, September.
  • Handle: RePEc:ntj:journl:v:62:y:2009:i:3:p:555-62

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    References listed on IDEAS

    1. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel, 2009. "Greenhouse Gas Reductions under Low Carbon Fuel Standards?," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 106-146, February.
    2. Gilbert E. Metcalf, 2006. "Federal Tax Policy Towards Energy," Discussion Papers Series, Department of Economics, Tufts University 0612, Department of Economics, Tufts University.
    3. Lucas W. Davis & Matthew E. Kahn, 2008. "International Trade in Used Durable Goods: The Environmental Consequences of NAFTA," NBER Working Papers 14565, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Mark Pauly, 2012. "Wussinomics: the state of competitive efficiency in private health insurance," International Journal of Health Economics and Management, Springer, vol. 12(3), pages 235-245, September.
    2. Joseph Bankman & John Cogan & R. Glenn Hubbard & Daniel P. Kessler, 2012. "Reforming the Tax Preference for Employer Health Insurance," NBER Chapters,in: Tax Policy and the Economy, Volume 26, pages 43-58 National Bureau of Economic Research, Inc.

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