Will tax-based health insurance reforms help the self-employed stay in business?

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

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 languageEnglish (US)
Pages (from-to)441-460
Number of pages20
JournalContemporary Economic Policy
Volume29
Issue number3
DOIs
StatePublished - Jul 2011
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics
  • Public Administration

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