A JOINT STUDY CBO/JCT Subsidizing Infrastructure Investment with Tax-Preferred Bonds October 2009
Unless otherwise indicated, all years in this report are federal fiscal years. Numbers in the text and tables of this report may not add up to totals because of rounding. In this analysis, investment in infrastructure is defined as capital spending on transportation, utilities (such as water and power supply), environmental projects, and schools. In addition, because they account for a significant share of the tax-exempt debt issued, health care facilities and hospitals are also treated as infrastructure. Under this study’s definition, capital spending consists of investment in physical capital, such as structures and facilities, rather than intangible capital, which is formed by spending on educational programs or on research and development.
The paper was written by Nathan Musick of the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT). Within CBO, Elizabeth Cove Delisle, Mark Hadley, and Susan Yang provided useful comments, as did Thomas Woodward (formerly of CBO). Cynthia Belmonte of the Department of the Treasury provided data and analysis of nonprofit bond issuance. Dennis Zimmerman of the American Tax Policy Institute and Matt Fabian of Municipal Market Advisors reviewed the draft. (The assistance of external reviewers implies no responsibility for the final product, which rests solely with CBO and JCT.)
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