Becker's Theory of Taxation

Becker's Theory of Taxation suggests that individuals respond to taxes by adjusting their behavior to minimize their overall costs. When taxes increase, people might work less, save less, or find ways to avoid or reduce their tax burden. Conversely, lower taxes can encourage more work or investment. The theory emphasizes that taxation influences economic choices, and policymakers should consider these behavioral responses to achieve desired fiscal and social outcomes efficiently. It highlights that the true impact of taxation extends beyond just government revenue, affecting individual decision-making and economic activity.