The article explores how people adjust their income in response to changes in tax policies. By analyzing tax returns from the 1980s, the researchers found that higher-income individuals are more likely to change their taxable income compared to lower-income individuals. They also discovered that the overall elasticity of taxable income is around 0.4, meaning that people's taxable income changes by 0.4% for every 1% change in tax rates. Based on these findings, the researchers suggest that an optimal income tax system would involve providing a large demogrant to low-income individuals that decreases as income rises, with lower tax rates for higher-income earners.