Capital income taxation and household saving

Anne Kerttula

No 29/1989, Bank of Finland Research Discussion Papers from Bank of Finland

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.

Date: 1989
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:bofrdp:rdp1989_029

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