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Capital income taxation and household saving

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  • Kerttula, Anne

Abstract

This paper studies capital income taxation and household saving from three different points of view. Firstly, we work through the effects of capital income taxation in a life cycle model. There are income and substitution effects to consider, and the relative magnitude of these will determine the final outcome. Secondly, we study some long-run issues related to capital income taxation. It has quite a. few long-run effects that need to be considered if we are to use it as a policy instrument. Finally, we have a look at how the actual tax system treats the return to savings. In practice, capital income tends to be lightly taxed because of various provisions.

Suggested Citation

  • Kerttula, Anne, 1989. "Capital income taxation and household saving," Bank of Finland Research Discussion Papers 29/1989, Bank of Finland.
    • Handle: RePEc:zbw:bofrdp:rdp1989_029
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    References listed on IDEAS

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    1. Persson, Mats & Persson, Torsten & Svensson, Lars E O, 1987. "Time Consistency of Fiscal and Monetary Policy," Econometrica, Econometric Society, vol. 55(6), pages 1419-1431, November.
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    4. Summers, Lawrence H, 1981. "Capital Taxation and Accumulation in a Life Cycle Growth Model," American Economic Review, American Economic Association, vol. 71(4), pages 533-544, September.
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    7. Koskela, Erkki & Viren, Matti, 1989. "International differences in saving rates and the life cycle hypothesis : A comment," European Economic Review, Elsevier, vol. 33(7), pages 1489-1498, September.
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    9. Haaparanta, Pertti & Starck, Christian & Vilmunen, Jouko, 1988. "Kasvavien työtulojen odotukset vähentävät kotitalouksien säästämistä," Bank of Finland Research Discussion Papers 21/1988, Bank of Finland.
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    13. Lawrence H. Summers, 1985. "Issues in National Savings Policy," NBER Working Papers 1710, National Bureau of Economic Research, Inc.
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    17. Koskela, Erkki & Virén, Matti, 1989. "Taxes, credit market 'imperfections' and inter-country differences in the household saving ratio," Bank of Finland Research Discussion Papers 21/1989, Bank of Finland.
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