Taxation-State and Local | Tax Law
These remarks were prepared for the Multistate Tax Commission’s State and Local Business Tax Symposium at American University. The panel addressed the pressure on state and local officials to adopt tax incentives to prevent businesses from leaving their jurisdiction or to attract new business. The panel questions whether firms actually choose their location based on state and local taxation, or whether tax incentives are simply a result of political pressure. Further issues raised were the effect of property taxation on the price of land and whether revenue forgone by tax incentives is proportional to the benefits received. Equity concerns are also addressed, such as whether tax incentives to new businesses unfairly prejudice existing businesses in the same jurisdiction. A final question considered was whether tax incentives are a type of government spending equal to the amount of taxes that would have been collected absent the incentives, that is, whether they should be viewed as tax expenditures.
Pomp, Richard; Kanter, Sandra; Simonson, Kenneth D.; and Vaughan, Roger, "Can Tax Policy Be Used to Stimulate Economic Development?" (1980). Faculty Articles and Papers. 557.