The Double Taxation of Savings: The Italian Debate Revisited

The statement that taxing earned income implies that saved income is taxed more than consumed income is usually credited to John Stuart Mill and was championed by Irving Fisher, even though, in the first half of the twentieth century, international doctrine never accepted it, save for Alfred Marshall and A. C. Pigou. In Italy the double taxation of savings was endorsed by Luigi Einaudi and was the object of heated debate among Italian public finance scholars. The expenditure tax should have followed from the theorem of double taxation as a corollary, and indeed, it was proposed by Einaudi and revived by Nicholas Kaldor in 1955. The present article is dedicated to examining the crucial aspects of the Italian debate on the double taxation of savings, which lasted from 1912 to 1942, with the aim, first, of highlighting its peculiarity and specificity with respect to the previous English-language literature, and second, of analyzing from a historiographical perspective the main reasoning put forward in the debate.