Some Taxpayers Voluntarily Have More Taxes Withheld from Their Paychecks

question 69

Essay

Some taxpayers voluntarily have more taxes withheld from their paychecks 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 paychecks 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:

Fee-For-Service

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Strategy/Environment Fit

The alignment between a company's strategies and its external environment to ensure effectiveness.