ICI supports national tax policies that ensure fund shareholders receive tax treatment similar to direct investors in stocks, bonds, and other securities. Unlike most corporations, a mutual fund generally distributes all of its earnings each year and is taxed only on the amounts it retains. Fund investors ultimately are responsible for paying tax on the fund earnings they receive either as cash or additional fund shares.
Despite this straightforward "pass-through" tax treatment of fund earnings, however, complex tax laws and regulations at the state, federal, and international level often subject fund investors to disparate tax treatment. For many years, the Institute has supported tax treatment that ensure a "level playing field" for investors who choose to invest in the securities markets through U.S. mutual funds and other investment companies.
