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Friday, February 19, 2010

CRS Issue Statement on Investment Income Taxation

Thomas L. Hungerford, Coordinator
Specialist in Public Finance

Jane G. Gravelle
Senior Specialist in Economic Policy

Donald J. Marples
Specialist in Public Finance

Carol A. Pettit
Legislative Attorney

Patrick Purcell
Specialist in Income Security

Jennifer Teefy
Information Research Specialist

The U.S. economy's productive capacity depends on the quality and quantity of the capital stock, the quality and size of the labor force, and improvements in production techniques. The accumulation of capital goods occurs through investment; consequently, investment is an important determinant of long-term economic growth and economic well-being. Investment is also important to the process of how growth in the labor force is accommodated and how new technologies are introduced. Investment depends, to a great extent, on national saving. Many firms' investment in capital goods is financed, in part, by the sale of bonds or by new public stock issues. These financial assets (that is, the stocks and bonds) are purchased by households, mutual funds, and pension plans. Overall, the growth of financial assets corresponds closely to changes in the stock of capital goods.

Date of Report: January 19, 2010
Number of Pages: 3
Order Number: IS40337
Price: $7.95

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