The authors use experimental economics to examine how people adjust their labor supply in response to changes in tax rates. In this experiment, one participant randomly chosen is required to adjust his or her labor supply and is taxed to the benefit of another participant.We ran four different treatments defined by volume of work (high or low) and whether the tax rate is chosen by the other participants or at random by the computer.We observe that the labor supply decreases (or: increases) with a rise (or: decline) in tax rates.We find a strong disincentive effect of taxation, particularly when the work volume is high and tax rates are set by tax recipients.