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Taxes and Fringe Benefits Offered by Employers

Author

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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.

Suggested Citation

  • William M. Gentry & Eric Peress, 1994. "Taxes and Fringe Benefits Offered by Employers," NBER Working Papers 4764, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:4764
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    References listed on IDEAS

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    1. Woodbury, Stephen A & Hamermesh, Daniel S, 1992. "Taxes, Fringe Benefits and Faculty," The Review of Economics and Statistics, MIT Press, vol. 74(2), pages 287-296, May.
    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 267-282, May.
    3. Turner, Robert W., 1987. "Taxes and the number of fringe benefits received," Journal of Public Economics, Elsevier, vol. 33(1), pages 41-57, June.
    4. 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.
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    Citations

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    Cited by:

    1. 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.
    2. Juurikkala, Tuuli & Lazareva, Olga, 2006. "Non-wage benefits, costs turnover, and labor attachment : evidence from Russian firms," BOFIT Discussion Papers 4/2006, Bank of Finland, Institute for Economies in Transition.
    3. Ji-Liang Shiu & Meng-Chi Tang, 2016. "Household Preferences and Joint Decisions on Employer-Provided Health Insurance Access," Manchester School, University of Manchester, vol. 84(6), pages 723-748, December.
    4. 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.
    5. 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.
    6. Thomas Buchmueller, 1999. "Fringe benefits and the demand for part-time workers," Applied Economics, Taylor & Francis Journals, vol. 31(5), pages 551-563.
    7. 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.).
    8. Mark Stabile, 2002. "The Role of Tax Subsidies in the Market for Health Insurance," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(1), pages 33-50, January.
    9. Gruber, Jonathan, 2011. "The Tax Exclusion for Employer-Sponsored Health Insurance," National Tax Journal, National Tax Association;National Tax Journal, vol. 64(2), pages 511-530, June.
    10. Dizioli, Allan & Pinheiro, Roberto, 2016. "Health insurance as a productive factor," Labour Economics, Elsevier, vol. 40(C), pages 1-24.
    11. repec:eee:labchp:v:3:y:1999:i:pc:p:3309-3416 is not listed on IDEAS
    12. 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.
    13. Jonathan Gruber, 2002. "Taxes and Health Insurance," NBER Chapters,in: Tax Policy and the Economy, Volume 16, pages 37-66 National Bureau of Economic Research, Inc.
    14. Tuuli Juurikkala & Olga Lazareva, 2006. "Non-wage benefits, costs of turnover, and labor attachment: evidence from Russian firms," Working Papers w0062, Center for Economic and Financial Research (CEFIR).
    15. 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.
    16. 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.

    More about this item

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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