The Impact of the 1986 Tax Reform Act on Personal Saving [report]

Jonathan Skinner, Daniel Feenberg
1990 unpublished
Many critics believed that the Tax Reform Act of 1986 (TRA86) would discourage saving. Yet personal saving rates have rebounded since 1987. This rebound might have been caused by a general decline in marginal tax rates on household saving. And we estimate, at least for the 1980s, a positive elasticity of saving with respect to the after-tax rate of return. But the tax changes alone cannot account for the recent upswing in saving rates. Furthermore, the positive saving elasticity during the
more » ... ity during the 1980s is fleeting and fragile; during the entire postwar period the correlation between the after-tax rate of return and personal saving is at most zero.
doi:10.3386/w3257 fatcat:dqa5kb2ocnbp5li36hldcrbfv4