Optimal Tax Deductions for Net Losses under Private Insurance with an Upper Limit

11 Pages Posted: 18 Nov 2007

See all articles by Rachel J. Huang

Rachel J. Huang

National Central University at Taiwan - Department of Finance; Graduate Institute of Finance, NTUST

Larry Y. Tzeng

National Taiwan University - Department of Finance

Abstract

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.

Suggested Citation

Huang, Rachel J. and Tzeng, Larry, Optimal Tax Deductions for Net Losses under Private Insurance with an Upper Limit. Journal of Risk & Insurance, Vol. 74, No. 4, pp. 883-893, December 2007. Available at SSRN: https://ssrn.com/abstract=1030870 or http://dx.doi.org/10.1111/j.1539-6975.2007.00239.x

Rachel J. Huang (Contact Author)

National Central University at Taiwan - Department of Finance ( email )

No. 300, Jhongda Rd, Jhogli City, Taoyuan, Taiwan,
Jhongli, TY 32001
Taiwan

Graduate Institute of Finance, NTUST ( email )

#43,Sec.4
Keelung Rd
Taipei, Taipei 106
Taiwan

Larry Tzeng

National Taiwan University - Department of Finance ( email )

1 Sec. 4, Roosevelt Road
Taipei, 106
Taiwan

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