How tax impacts taxpayer behaviour

Whilst politicians are keen to use tax to influence taxpayer behaviour, the results are not always as predicted. Both tax rate changes and the film financing reliefs show that taxpayers do react to reliefs, if not always in the way that the government would like and the US tax rules are the cause of the recent spate of corporate inversion transactions. There is also a danger in burdening the already overcomplicated tax code with numerous small headline tax reliefs. Politicians should think carefully about the consequences of proposed tax changes.