Tax systems around the world are designed to raise revenues in an equitable and efficient manner. While equity and efficiency are defined differently in various tax jurisdictions, most tax systems seek to implement a system of progressive tax rates in a way that promotes stable economic growth and in a way that stimulates socially desirable activities._x000B__x000B_These multiple objectives manifest themselves in tax rates that increase wtih income levels, that change over time, and that vary across different economic activities and tax jurisdictions. These features of the tax system provide significant incentives for taxpayers to engage in tax planning strategies. In fact, the ability of the tax system to redirect economic activities in an efficient manner depends upon taxpayer’s responsiveness to these incentives.