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Optimal Tax Deductions for Net Losses Under Private Insurance With an Upper Limit
Author(s) -
Huang Rachel J.,
Tzeng Larry Y.
Publication year - 2007
Publication title -
journal of risk and insurance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.055
H-Index - 63
eISSN - 1539-6975
pISSN - 0022-4367
DOI - 10.1111/j.1539-6975.2007.00239.x
Subject(s) - economics , tax deduction , limit (mathematics) , private insurance , rest (music) , actuarial science , business , public economics , tax reform , state income tax , health insurance , gross income , mathematics , mathematical analysis , health care , economic growth , medicine , cardiology
Kaplow (1992b) shows that governments should not provide a tax deduction for net losses when a private insurance contract is available. However, his findings rest on the assumption that the private insurance is proportional coverage. We find that Kaplow's conclusions may not hold when the private insurance contract contains an upper limit. The findings of our article show that Kaplow's conclusions are sensitive to the assumption that the insurance contract is available in the private market.