Date of Award
Accounting and Finance Department
A tax credit is an incentive for businesses and individuals, which allows them to reduce their tax obligation. Federal and state governments grant tax credits in areas such as employment and the environment. An investment tax credit (ITC) allows businesses and individuals to reduce their tax obligation when they venture into new businesses and developments. It is natural for businesses and individuals to invest for continued growth. If the economy is in a decline, however, investments may drop by businesses and individuals. In hard economic times, the federal and state governments provide the ITC incentive to stimulate economic growth. The United States federal government has historically enacted ITCs in order to stimulate business investment. Private investment is vital to the business community. Existing businesses and individuals make new investments for a variety of reasons. Expansion can give a business an advantage by developing partnerships with other businesses or individuals from different industries. National, or even international, recognition from investing with partners will open new markets for a business. Investments help businesses and individuals achieve a greater rate of return and the benefits of the investment will more than likely outweigh its cost (Drury 233). The primary reason businesses and individuals invest is to earn higher profits in the future. In recent years there has been an increase in the number of individuals starting new businesses. In 2010, there were 565,000 businesses created each month by 0.34yo of individuals (Clifford). Despite a weak economy, there were new ventures and investments which may have been impacted by the United States fiscal policies, such as tax credits or incentives. This thesis explores the introduction of the history of the investment tax credit, including its introduction in federal legislation, subsequent changes, and the motivations and financial impact of such changes. There are a variety of investment tax credits offered today. A few of them will be identified and evaluated for effectiveness.
Lambert, Rachael I., "The History of the Investment Tax Credit" (2013). Theses and Dissertations. 134.