Permanent tax changes impact labor supply more than temporary ones!
The article explores how income taxes affect people's decisions about working and building skills over their lifetime. When taxes are higher, people may work less and invest less in their skills. Surprisingly, permanent tax changes have a bigger impact on work decisions than temporary ones. Also, taxes can slow down the growth of skills, leading to lower productivity in the long run. Overall, the traditional view of income taxes may underestimate the negative effects on people's well-being.