If a reduction in taxes on savings reduced the amount of saving,then the

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This is an example of the income effect outweighing the substitution effect. A reduction in taxes on savings would increase the after-tax return on savings, which would increase the purchasing power of individuals. This increase in purchasing power would lead to an increase in consumption, which would decrease saving. The decrease in saving is caused by the increase in consumption due to the increase in purchasing power, which is the income effect. The substitution effect, which would increase saving due to the increased after-tax return on savings, would be weaker than the income effect in this case. Therefore, the income effect would outweigh the substitution effect, resulting in a decrease in saving.

If a Reduction in Taxes on Savings Reduced the Amount