How can taxation regulate the acts of the people?

Taxation can either encourage or discourage certain actions by the people... for example, by providing tax deductions for home mortgage interest and real estate taxes, home ownership is encouraged. By providing a tax benefit for 401K and IRA accounts, people are encouraged to save for retirement. At the same time, taxes on things like cigarettes and alcohol may discourage people from buying as much of them as they might have if there were no taxes.