How does the tax code contribute to rising health care costs?
A. Since the tax code provides exemptions for research and development, it provides an incentive for businesses to develop high-tech and expensive new treatments.
B. Since services are not subject to state sales taxes, households tend to spend more of their money on health care services than on other goods.
C. Since health care purchases are subject to such high taxes, total spending on health care (including taxes) is quite high.
D. Since health insurance benefits are untaxed, workers have an incentive to receive more of their compensation in the form of health insurance benefits.
Answer: D
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