Tax advantage leads to higher levels of insurance coverage

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When fringe benefits such as health insurance are not taxed, which of the following does not happen? a. The equilibrium wage rises slightly. b. The government loses revenue. c. The value to the employee of the fringe benefit may be less than its price, and the employer will still want to provide it. d. Moral hazard problems worsen as the tax advantage leads to higher levels of insurance coverage .

Reference no: EM131195317

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