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Can Tax Code Affect Behaviors

Tax code can affect behaviors. Is this a good thing? Is this/can it be abused?

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The tax code definitely affects behaviors, and it can be a good thing. As with any element, good things can be abused if used excessively for personal gain or improperly. Let's look at some examples of how the tax code can affect our behavior.

1. I am very wealthy and have $50,000 just sitting in a bank that I really don't need. All of my bills are paid and I have a substantial retirement and savings account. I am going to owe several thousand dollars in taxes (but not $50,000, and I've got the money set aside for taxes). I can let the money sit in the bank or donate the cash to my church/community shelter/other organization and claim the charitable donation on my Schedule A, per the tax code.

2. I have a large portfolio that includes major $ in stock holdings. I have been considering selling a series of my ...

Solution Summary

This solution examines if the tax code can affect behaviors, and if doing so is good, bad, or abusive.