What question did this study set out to answer?

The research aims to investigate how quickly and accurately taxpayers respond to changes in income tax laws.

March 18, 2026

Some Empirical Evidence on Taxpayer Rationality.

MMMichael Z. Moore BSBert M. SteeceUniversity of Southern California CSCharles W. SwensonUniversity of Southern California

Key Points

The research aims to investigate how quickly and accurately taxpayers respond to changes in income tax laws.
Utilized a multiple time series model to analyze taxpayer behavior.
Examined both individual and corporate taxpayer reactions to tax law changes.
Focused on income tax prepayments as a measure of response.
Individuals and corporations adjust their income tax prepayments quickly after a tax increase.
The adjustments are relatively accurate to the changes in tax law.

Abstract

Abstract ABSTRACT: Little is known about the speed and accuracy of aggregate taxpayer response to an income tax law change. Using a multiple time series model, it was found that individuals and corporations quickly and relatively accurately adjust their income tax prepayments in response to a tax increase.

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