Proposals to Tax Life Insurance Savings as Personal Income

A bstract . Proposals to tax the realized net increment built up in life insurance policies amount to suggestions that we tax rewards to suppliers of capital. As tax policy it would tend to discourage capital accumulation. Many types of income and of capital gains are not taxed as a matter of social policy. Taxing the "inside buildup" would obstruct the building up of a capital base for the family and the economy. Economists recognize that there are alternatives, e.g. , a consumption based tax. In a time of great need for capital, a time of capital shortage, this tax policy would be retrogressive.