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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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    12. Virén, Matti, 1989. "The long-run relationship between interest rates and inflation : some cross-country evidence," Research Discussion Papers 20/1989, Bank of Finland.
    13. 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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