This paper studies the trade-offs associated with income redistribution in an overlapping generations model in which marginal propensities to save increase with permanent income. By transferring permanent income from high savers to low savers, redistribution lowers aggregate savings and depresses investment in capital. If more capital is welfare improving, the government faces a trade-off between redistribution and investment whose size depends on the distribution of marginal propensities to save across the income distribution. I characterize this trade-off theoretically and quantify its magnitude. In a simple model with endogenous labor, I show that the welfare costs of a standard labor income redistribution policy can be decomposed into the familiar equity-efficiency trade-off and a new term corresponding to this permanent income redistribution-investment channel. I calibrate a quantitative overlapping generations model to match empirical estimates of marginal propensities to save from U.S. household panel data. In a back-of-envelope calculation using the simple model, the permanent income redistribution channel accounts for about 30 percent of the welfare cost of the labor income distortion channel. In the quantitative model, this ratio rises to between 44 and 47 percent.