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Income Tax Incentives to Promote Saving

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  • Charles Becker
  • Don Fullerton

Abstract

We examine six alternative plans which might be discussed in an effort to increase consumer savings through the personal income tax system in the United States. These plans attempt to affect savings through an increase in the real rate of return either by direct tax cuts on savings or by indexing tax rates against inflation. The paper presents estimates of static and dynamic resource allocation effects for the six plans, and compares them to results obtained in earlier work on the impacts of more sweeping reforms. A medium-scale numerical general equilibrium model is used which integrates the U. S. tax system with consumer demand behavior by household and producer behavior by industry.

Suggested Citation

  • Charles Becker & Don Fullerton, 1980. "Income Tax Incentives to Promote Saving," NBER Working Papers 0487, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:0487
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    References listed on IDEAS

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    1. Charles L. Ballard & Don Fullerton & John B. Shoven & John Whalley, 1985. "General Equilibrium Analysis of Tax Policies," NBER Chapters, in: A General Equilibrium Model for Tax Policy Evaluation, pages 6-24, National Bureau of Economic Research, Inc.
    2. Fullerton, Don, 1982. "On the possibility of an inverse relationship between tax rates and government revenues," Journal of Public Economics, Elsevier, vol. 19(1), pages 3-22, October.
    3. Boskin, Michael J, 1978. "Taxation, Saving, and the Rate of Interest," Journal of Political Economy, University of Chicago Press, vol. 86(2), pages 3-27, April.
    4. Lawrence H. Summers, 1978. "Tax Policy in a Life Cycle Model," NBER Working Papers 0302, National Bureau of Economic Research, Inc.
    5. Martin Feldstein & Lawrence Summers, 1983. "Inflation and the Taxation of Capital Income in the Corporate Sector," NBER Chapters, in: Inflation, Tax Rules, and Capital Formation, pages 116-152, National Bureau of Economic Research, Inc.
    6. Charles E. McLure, Jr., 1978. "A Status Report on Tax Integration in the United States," NBER Working Papers 0298, National Bureau of Economic Research, Inc.
    7. Michael J. Boskin, 1978. "Taxation, Saving, and the Rate of Interest," NBER Chapters, in: Research in Taxation, pages 3-27, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Martin S. Feldstein & Daniel R. Feenberg, 1983. "Alternative Tax Rules and Personal Saving Incentives: Microeconomic Data and Behavioral Simulations," NBER Chapters, in: Behavioral Simulation Methods in Tax Policy Analysis, pages 173-210, National Bureau of Economic Research, Inc.
    2. Mishra, Ashok K. & Morehart, Mitchell J., 2003. "An Analysis Of Tax-Deferred Retirement Savings Of Farm Households," 2003 Annual meeting, July 27-30, Montreal, Canada 22234, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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