Investment Tax Credit:
Unresolved Issues
PAD-78-40: Published: May 8, 1978. Publicly Released: May 8, 1978.
Additional Materials:
- Full Report:
Contact:
In an effort to stimulate economic growth, the administration proposed that the temporary 10-percent investment credit be made permanent and extended. Previous studies of investment behavior were evaluated to determine the role of the investment tax credit in promoting stability and growth.
Since 1962, when the investment tax credit was enacted, gross private domestic investment as a percentage of the nation's economic output has not changed appreciably. Two areas of concern regarding the level of investment spending are shortrun economic recovery and future productivity gains. Studies revealed that: (1) about 2 to 4 years is required for a significant response in investment expenditures to tax credit changes; (2) a large portion of the credit goes to reward investment that would have been made whether or not there was such a credit; (3) the major thrust of the credit is to provide incentive to long-term economic growth; and (4) the credit encourages investment in new, more productive equipment and encourages a greater proportion of capital investment in equipment. However, the credit may distort normal market forces and lead to more intensive use of capital at the expense of labor, affect rates of return on assets, allow additional tax writeoffs, and bypass businesses which do not require large capital investments. Two studies suggested that the method of financing the credit may lead to changes in capital costs, in redistribution of wealth, and in consumer behavior.
Jan 14, 2021
Tax Administration:
Better Coordination Could Improve IRS's Use of Third-Party Information Reporting to Help Reduce the Tax GapGAO-21-102: Published: Dec 15, 2020. Publicly Released: Jan 14, 2021.
Nov 18, 2020
-
IRS Reorganization:
Planning Addressed Key Reform Practices, but Goals and Measures for the Plan Have Not Been FinalizedGAO-21-18: Published: Oct 19, 2020. Publicly Released: Nov 18, 2020.
Nov 9, 2020
-
Opportunity Zones:
Improved Oversight Needed to Evaluate Tax Expenditure PerformanceGAO-21-30: Published: Oct 8, 2020. Publicly Released: Nov 9, 2020.
Oct 19, 2020
-
Tax Administration:
Opportunities Exist to Improve Oversight of Hospitals' Tax-Exempt StatusGAO-20-679: Published: Sep 17, 2020. Publicly Released: Oct 19, 2020.
Sep 23, 2020
-
Taxpayer Service:
IRS Could Improve the Taxpayer Experience by Using Better Service Performance MeasuresGAO-20-656: Published: Sep 23, 2020. Publicly Released: Sep 23, 2020.
Aug 31, 2020
-
Abusive Tax Schemes:
Offshore Insurance Products and Associated Compliance RisksGAO-20-589: Published: Jul 30, 2020. Publicly Released: Aug 31, 2020.
Jun 29, 2020
-
Taxpayer Compliance:
More Income Reporting Needed for Taxpayers Working through Online PlatformsGAO-20-366: Published: May 28, 2020. Publicly Released: Jun 29, 2020.
Jun 16, 2020
-
Tax Exempt Organizations:
IRS Increasingly Uses Data in Examination Selection, but Could Further Improve Selection ProcessesGAO-20-454: Published: Jun 16, 2020. Publicly Released: Jun 16, 2020.
May 1, 2020
-
Management Report:
Improvements Are Needed to Enhance the Internal Revenue Service's Internal Control over Financial ReportingGAO-20-480R: Published: May 1, 2020. Publicly Released: May 1, 2020.
Apr 30, 2020
-
Priority Open Recommendations:
Internal Revenue ServiceGAO-20-548PR: Published: Apr 23, 2020. Publicly Released: Apr 30, 2020.
Looking for more? Browse all our products here
Explore our Key Issues on Tax Policy and Administration
Explore our other Key Issues here
