A number of studies explore whether pre-tax income changes in response to tax policy. Pre-tax income would change if households alter their real economic behavior (., their actual behavior, such as working hours, rather than changes made only on paper) or if they pursue tax-avoidance strategies, such as sheltering income offshore. The literature on this issue suggests that households do pursue some tax avoidance strategies in light of changes in their tax rates, rather than alter their real economic behavior. But this tax avoidance is limited to the very top of the income distribution: the top percent. Most of.
