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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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    14. Alan J. Auerbach, 1988. "Capital Gains Taxation in the United States: Realizations, Revenue, and Rhetoric," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 19(2), pages 595-638.
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    16. 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.
    17. 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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