Limiting the Tax Exclusion for Employment-based Health Insurance 555 National Tax Journal

Abstract- Removal or limitation of the current exclusion of employment-related health benefi t payments from taxable income would improve economic effi ciency and equity, but is this suffi cient 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 insur-ance market and to increase the tax share of upper middle income households