Abstract
The self-employed face a tax-induced disadvantage relative to wage and salary workers when it comes to the payment of health insurance premiums. This paper uses a panel of individual tax return data to test whether lower health insurance premium costs because of an expanded tax incentive result in longer periods of self-employment. The results suggest that households claiming the deduction are indeed less likely to exit self-employment. Equalizing the treatment of health insurance premiums for the self-employed and wage workers by allowing full deductibility from Self-Employment Contributions Act (SECA) taxes would result in a 7% decrease in the probability of exit. (JEL H32, I18, L26)
Original language | English (US) |
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Pages (from-to) | 441-460 |
Number of pages | 20 |
Journal | Contemporary Economic Policy |
Volume | 29 |
Issue number | 3 |
DOIs | |
State | Published - Jul 2011 |
Externally published | Yes |
ASJC Scopus subject areas
- General Business, Management and Accounting
- Economics and Econometrics
- Public Administration