4. Capital gains taxes decrease the returns that people can earn on their savings / investments. The taxes basically make the intertemporal budget constraint flatter. Show that when the capital gains tax increases, a saver might start saving less, but the person could also start saving more. 4. Capital gains taxes decrease the returns that people can earn on their savings / investments. The taxes basically make the intertemporal budget constraint flatter. Show that when the capital gains tax increases, a saver might start saving less, but the person could also start saving more