Taxation and savings: a survey

Abstract

The choice of how much of society’s income to consume today and how much to save for future consumption is among the most important economic decisions. It can have implications not only for the well-being of the households taking the decisions, but also for the rate at which the economy invests and grows, and therefore the well-being of future generations. The way in which savings decisions are taken is a matter of ongoing research in the literature, involving such important and unresolved issues as the degree of foresight and rationality of households, the extent to which capital markets are complete and wellfunctioning, the importance of life-cycle versus bequest versus precautionary motives for saving, and more generally the weight, if any, that current savers put on the welfare of future generations.