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Rethinking Property Tax Incentives for Business

Author: Daphne A. Kenyon
Publisher:
ISBN: 9781558442337
Category : Electronic books
Languages : en
Pages : 0

Book Description
The use of property tax incentives for business by local governments throughout the United States has escalated over the last 50 years. While there is little evidence that these tax incentives are an effective instrument to promote economic development, they cost state and local governments $5 to $10 billion each year in forgone revenue. Three major obstacles can impede the success of property tax incentives as an economic development tool. First, incentives are unlikely to have a significant impact on a firm's profitability since property taxes are a small part of the total costs for most businesses--averaging much less than 1 percent of total costs for the U.S. manufacturing sector. Second, tax breaks are sometimes given to businesses that would have chosen the same location even without the incentives. When this happens, property tax incentives merely deplete the tax base without promoting economic development. Third, widespread use of incentives within a metropolitan area reduces their effectiveness, because when firms can obtain similar tax breaks in most jurisdictions, incentives are less likely to affect business location decisions. This report reviews five types of property tax incentives and examines their characteristics, costs, and effectiveness: property tax abatement programs; tax increment finance; enterprise zones; firm-specific property tax incentives; and property tax exemptions in connection with issuance of industrial development bonds. Alternatives to tax incentives should be considered by policy makers, such as customized job training, labor market intermediaries, and business support services. State and local governments also can pursue a policy of broad-based taxes with low tax rates or adopt split-rate property taxation with lower taxes on buildings than land.State policy makers are in a good position to increase the effectiveness of property tax incentives since they control how local governments use them. For example, states can restrict the use of incentives to certain geographic areas or certain types of facilities; publish information on the use of property tax incentives; conduct studies on their effectiveness; and reduce destructive local tax competition by not reimbursing local governments for revenue they forgo when they award property tax incentives.Local government officials can make wiser use of property tax incentives for business and avoid such incentives when their costs exceed their benefits. Localities should set clear criteria for the types of projects eligible for incentives; limit tax breaks to mobile facilities that export goods or services out of the region; involve tax administrators and other stakeholders in decisions to grant incentives; cooperate on economic development with other jurisdictions in the area; and be clear from the outset that not all businesses that ask for an incentive will receive one.Despite a generally poor record in promoting economic development, property tax incentives continue to be used. The goal is laudable: attracting new businesses to a jurisdiction can increase income or employment, expand the tax base, and revitalize distressed urban areas. In a best case scenario, attracting a large facility can increase worker productivity and draw related firms to the area, creating a positive feedback loop. This report offers recommendations to improve the odds of achieving these economic development goals.

The Limitless City

Author: Oliver Gillham
Publisher: Island Press
ISBN: 9781597263498
Category : Architecture
Languages : en
Pages : 332

Book Description
One of the great debates of our time concerns the predominant form of land use in America today -- the all too familiar pattern of commercial and residential development known as sprawl. But what do we really know about sprawl? Do we know what it is? Where did it come from? Is it really so bad? If so, what are the alternatives? Can anything be done to make it better? The Limitless City offers an accessible examination of those and related questions. Oliver Gillham, an architect and planner with more than twenty-five years of experience in the field, considers the history and development of sprawl and examines current debates about the issue. The book: offers a comprehensive definition of sprawl in America traces the roots of sprawl and considers the factors that led to its preeminence as an urban and suburban form reviews both its negative impacts (loss of open space, increased pollution, gridlock) as well as its positive aspects (economic development, personal freedom, privacy) considers responses to sprawl including "smart growth," urban growth boundaries, regional planning, and the New Urbanism looks at what can be done to improve and counterbalance sprawl The author argues that whether we like it or not, sprawl is here to stay, and only by understanding where it came from and why it developed will we be able to successfully address the problems it has created and is likely to create in the future. The Limitless City is the first book to provide a realistic look at sprawl, with a frank recognition of its status as the predominant urban form in America, now and into the near future. Rather than railing against it, Gillham charts its probable future course while describing critical efforts that can be undertaken to improve the future of sprawl and our existing urban core areas.

Work Opportunity Tax Credit

Author: United States. Congress. House. Committee on Ways and Means. Subcommittee on Oversight
Publisher:
ISBN:
Category : Electronic government information
Languages : en
Pages : 76

Book Description

The Great American Jobs Scam

Author: Greg LeRoy
Publisher: Berrett-Koehler Publishers
ISBN: 1609943511
Category : Business & Economics
Languages : en
Pages : 299

Book Description
For the past 20 years, corporations have been receiving huge tax breaks and subsidies in the name of "jobs, jobs, jobs." But, as Greg LeRoy demonstrates in this important new book, it's become a costly scam. Playing states and communities off against each other in a bidding war for jobs, corporations reduce their taxes to next-to-nothing and win subsidy packages that routinely exceed $100,000 per job. But the subsidies come with few strings attached. So companies feel free to provide fewer jobs, or none at all, or even outsource and lay people off. They are also free to pay poverty wages without health care or other benefits. All too often, communities lose twice. They lose jobs--or gain jobs so low-paying they do nothing to help the community--and lose revenue due to the huge corporate tax breaks. That means fewer resources for maintaining schools, public services, and infrastructure. In the end, the local governments that were hoping for economic revitalization are actually worse off. They're forced to raise taxes on struggling small businesses and working families, or reduce services, or both. Greg LeRoy uses up-to-the-minute examples, naming names--including Wal-Mart, Raytheon, Fidelity, Bank of America, Dell, and Boeing--to reveal how the process works. He shows how carefully corporations orchestrate the bidding wars between states and communities. He exposes shadowy "site location consultants" who play both sides against the middle, and he dissects government and corporate mumbo-jumbo with plain talk. The book concludes by offering common-sense reforms that will give taxpayers powerful new tools to deter future abuses and redirect taxpayer investments in ways that will really pay off.

Improving Tax Increment Financing (TIF) for Economic Development

Author: David Merriman
Publisher:
ISBN: 9781558443778
Category : Economic development
Languages : en
Pages : 0

Book Description
Economist David Merriman of the University of Illinois at Chicago reviews more than 30 individual studies in the most comprehensive assessment of tax increment financing (TIF) with practical recommendations for policy makers and practitioners. The report finds that while TIF has the potential to draw investment into neglected places, it has not accomplished the goal of promoting economic development in most cases. First implemented in the 1950s, TIF funds economic development within a defined district by earmarking increases in future property tax revenues that result from increases in real estate values in the district. The tax revenue can be used for public infrastructure or to compensate private developers for their investments, but TIF is prone to several pitfalls: it often captures some revenues that would have been generated through normal appreciation in property values, it can be exploited by cities to obtain revenues that would otherwise go to overlying government entities such as school districts, and it can make cities' financial decisions less transparent by separating them from the normal budget process. The report recommends several ways that state and local policy makers can reform TIF practices going forward.

Local Economic and Employment Development (LEED) Investment Strategies and Financial Tools for Local Development

Author: OECD
Publisher: OECD Publishing
ISBN: 9264039864
Category :
Languages : en
Pages : 236

Book Description
Provides a comprehensive overview of financial instruments and investment strategies being implemented throughout OECD Member and non-Member countries for local development.

Making Sense of Incentives

Author: Timothy J. Bartik
Publisher: W.E. Upjohn Institute
ISBN: 0880996684
Category : Political Science
Languages : en
Pages : 180

Book Description
Bartik provides a clear and concise overview of how state and local governments employ economic development incentives in order to lure companies to set up shop—and provide new jobs—in needy local labor markets. He shows that many such incentive offers are wasteful and he provides guidance, based on decades of research, on how to improve these programs.