Consider the two-period model. Consumer's have preferences over current and future consumption (c and c'). Households only receive income in the first period, y. That is, income in the second period is equal to zero, y'=0. Households can save, s, for the second period and receive interest rate r. The slope of the budget constraint is -(1 r). As such, an increase in r would increase the slope in (c,c') space (the standard graph). The government implements a proportional tax on savings, 0