The issue is that an income tax (which applies to both capital and wage income) taxes savers at a higher rate than spendthrifts. I.e., if Steve blows all his m

The issue is that an income tax (which applies to both capital and wage income) taxes savers at a higher rate than spendthrifts. I.e., if Steve blows all his money on hookers, he pays a 20% tax. However, if Sally judiciously saves her money for a rainy day or unexpected expense, she will be paying a 28% tax rate.