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Distinguishing Development Incentives from Developer Give‐Aways: A Critical Guide for Development Practitioners and Citizens
Author(s) -
Oden Michael D.,
Mueller Elizabeth J.
Publication year - 1999
Publication title -
policy studies journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.773
H-Index - 69
eISSN - 1541-0072
pISSN - 0190-292X
DOI - 10.1111/j.1541-0072.1999.tb01959.x
Subject(s) - incentive , subsidy , public economics , tax incentive , politics , business , key (lock) , incentive program , public relations , marketing , finance , economics , political science , microeconomics , market economy , ecology , law , biology
The vast majority of communities offer financial incentives to private businesses and, among these, tax incentives remain the most widely used. Tax and other financial subsidies used to attract firms account for the bulk of public resources spent on economic development. Yet the interests of city residents—especially those marginalized in city politics—generally are not a key consideration in the fashioning of incentives. Using a hypothetical abatement proposal, this article highlights nine key questions that must be addressed to understand the potential benefits to the community of tax incentive programs. This exercise demonstrates how proponents of incentive deals typically overvalue benefits. By asking the right questions and conducting their own analysis, citizens can arrive at a more realistic estimate of net benefits.