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

Pauly, Mark V.

Abstract:

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.

Citation

Pauly, Mark V. (2009), Limiting the Tax Exclusion for Employmentbased Health Insurance: Are Improved Equity and Efficiency Enough?, National Tax Journal, 62:3, pp. 555-62

DOI: dx.doi.org/10.17310/ntj.2009.3.12