Households will use the least costly and least disruptive means of responding to taxes, if in fact they respond at all, according to public finance economist Joel Slemrod. If households can simply alter the timing of an activity and largely avoid the impact of a tax change, they can be expected to do so. If they can alter the way their income is categorized for tax purposes and avoid the tax, they can be expected to do that. Households have been shown to dramatically shift when they sell an asset in advance of a pending capital gains tax increase, such as.
