A new study, commissioned by the Associated Equipment Distributors (AED) and conducted by researchers at the College of William and Mary’s Thomas Jefferson Program in Public Policy, provides concrete evidence as to the positive impact infrastructure investment has on the economy and government tax receipts.
AED Study Findings
• One dollar spent on infrastructure construction produces roughly double ($1.92) the initial spending in direct and indirect economic output.
• A dollar in aggregate public infrastructure spending will generate $3.21 in economic output (GDP) over a 20-year period.
• Each dollar spent on infrastructure generates roughly 35 cents in indirect economic activity for manufacturers, 20 cents for professional and business services providers, and 10 cents for the finance, insurance, real estate, rental and leasing sector.
• Over 20 years, one dollar in aggregate infrastructure spending generates 96 cents in taxes.
o Each dollar invested in highways and streets returns approximately 35 cents in tax revenue, of which 23 cents accrues at the federal level.
o Investing $1 in sewer systems and water infrastructure generates $2.03 in tax receipts ($1.35 for the federal government).
“The bottom line is that there’s a big difference between investment and wasteful spending,” said Associated Equipment Distributors President and CEO Toby Mack. “When the federal government pays to build a road or sewer, it’s like a business buying a bulldozer or computer. It’s a productive asset that will spur economic activity and generate revenues for years to come.”
The full report is available at The Economic Impact and Financing of Infrastructure Spending.
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