• Corpus ID: 43011612

Table 1 Statutory Rates For The Investment Tax Credit In The United States ( percent ) Effective Business Special Public Date Capital + Purpose Utility Beginning Equipment Structures Property

@inproceedings{Chirinko1999Table1S,
  title={Table 1 Statutory Rates For The Investment Tax Credit In The United States ( percent ) Effective Business Special Public Date Capital + Purpose Utility Beginning Equipment Structures Property},
  author={Robert S. Chirinko},
  year={1999}
}

• Robert S. Chirinko
• Published 1999
• Economics

Investment tax credits are reductions in tax liabilities determined as a percentage of the price of a purchased asset. Starting with the Revenue Act of 1962, the investment tax credit (ITC) has been set at various rates, suspended, reinstated, repealed, resurrected, increased, and then eliminated completely in the Tax Reform Act of 1986. Reinstituting the ITC was part of the Clinton Administration's initial economic proposal to Congress, but it was not part of the 1993 budget bill enacted into law. Tax credits were initially granted primarily for the purchase of business capital equipment, and have been extended to other assets and activities (e.g., expenditures on research and development, restoration of historic buildings, and hiring of certain classes of workers). ITCs have been a quantitatively important tax expenditure ($21.3 billion in 1985), and equal the amount for two well-known tax expenditures: the exclusion of employer contributions for medical care and insurance premiums and the deductibility of nonbusiness state and local taxes (other than on owner-occupied homes). This entry is divided into three parts. Part one discusses the history, scope, and types of ITCs. The chief reason for granting these subsidies has been to stimulate economic activity, though which aspect of economic activity was the appropriate target for this stimulus has varied because of changing views about the structure of the economy and the possibilities for constructive public policies. These changes are considered in the second part. Finally, the impact of the ITC on economic activity is reviewed briefly in the third part of this entry.