Tax increment financing not bringing in more jobs or income, says analysis
“Tax increment financing (TIF) is a popular but ineffective economic development tool for Hoosier communities, and it needs more stringent state oversight, says a new policy brief from Ball State University.
“Some Economic Effects of Tax Increment Financing in Indiana,” an analysis of TIF districts in Indiana counties by Ball State’s Center for Business and Economic Research (CBER), found that TIFs are associated with less employment, less taxable income and slightly higher tax rates.
TIF districts were created by the Indiana General Assembly in the 1980s and are run by redevelopment commissions. These were designed to allow local governments to redevelop downtrodden areas by making infrastructure improvements, such as new roads and sewers. TIFs provide incentives to attract businesses or help existing companies expand without tapping general funds or raising taxes.
CBER examined TIF districts in Indiana from 2003-2012, evaluating the impact of TIF districts on capital growth, employment and tax rates in counties.
“Overall, TIFs are not an effective economic development tool,” said CBER director Michael Hicks, who co-authored the study with Dagney Faulk, CBER’s research director, and Pam Quirin, a CBER graduate assistant. “In fact, we found that in the average county, creation of a TIF district led to fewer jobs in manufacturing and retailing as well as a slight drop in the number of businesses.”
Ball State University 29 January 2015.
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