a. A reduction in the tax rate on income from saving would most directly benefit wealthy people who have a greater amount of capital income. The rise in the tax rate on workers would harm individuals whose incomes come mainly from labor earnings.
b. The increased incentive to save would reduce the interest rate, thus increasing investment, so the capital stock would be larger. As capital per worker rises, productivity would increase, as well as the real wage paid to workers.
c. Thus, in the long run, everyone, not just the wealthy, can benefit from reducing the tax rate on income from savings. However, these benefits would be reduced by the level of taxes paid on earnings