Incentives: A Guide to an Effective and Equitable Policy

摘要

The use of various tax and nontax incentives is a common practice of state andlocal governments to attract businesses to their jurisdictions or to retain existing businesses and help them expand. Over the past decade, the use of incentives has become a controversial issue among economic development practitioners at the state, regional, and local levels. Most practitioners regard incentives as legitimate and justifiable public subsidies to generate private investment, job creation, and economic growth whereas critics view them as an unnecessary commitment of public resources that can cause fiscal problems for jurisdictions. Based on emerging practices by some states, counties, and localities, the report provides a set of principles of establishing effective and equitable incentive policies to use in state, regional, and local economic development strategies. These principles also apply to performance-based incentive agreements negotiated by jurisdictions with individual companies. The report provides historical background on the current controversy over incentives and a comprehensive list with definitions of tax and nontax incentives. A chapter on states, communities, and companies examines objectives that state and communities seek to achieve with incentives and the location requirements of firms. Industrial sectors highlighted are autos, steel minimills, semiconductors, financial services, security services, and air cargo.