Some Taxpayers Voluntarily Have More Taxes Withheld from Their Paycheques

question 14

Essay

Some taxpayers voluntarily have more taxes withheld from their paycheques during the year in order to receive a large tax refund once a year. These taxpayers give the government an interest-free loan and lose the interest they could have earned by saving a portion of the larger paycheques they would have received during the year. Why might a person make this choice? What does this choice say about the theory of the consumption function?

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Definitions:

Concessions

Certain compromises or allowances made by a party in a negotiation or discussion to reach an agreement.

Likability

Likability refers to the qualities that make an individual appealing or attractive to others, often contributing to positive interpersonal relationships.

Credibility Factors

Elements that contribute to the believability or trustworthiness of a party in a negotiation, such as their expertise, reputation, and consistency.

Persistent

describes a trait or behavior characterized by continuing firmly or obstinately in an action or belief, often despite difficulty or opposition.