A comprehensive approach to the assessment of tax increment financing (TIF) projects

A comprehensive approach to the assessment of tax increment financing (TIF) projects

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Article ID: iaor20052429
Country: United States
Volume: 16
Issue: 3
Start Page Number: 394
End Page Number: 412
Publication Date: Jan 2004
Journal: Journal of Public Budgeting, Accounting and Financial Management
Authors: ,
Keywords: management, economics, government, statistics: empirical
Abstract:

One of the most popular economic development incentive tools used today is Tax Increment Financing (TIF). Proponents of TIF argue that these incentive programs have fostered new investment and increased property tax revenues in areas that would otherwise have experienced negative growth. Opponents argue that TIF is now used in non-blighted areas – on projects that could have been completed with no special government subsidies. This paper describes a number of perverse incentives that are inherent with TIF projects. It then outlines a comprehensive framework for estimating the net future fiscal impacts with and without proposed TIF projects for all affected jurisdictions. Finally, it illustrates how the framework can be used to reach better economic development policy decisions at both the state and local levels.

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