Abstract
Do the returns to business tax incentives differ according to the initial economic conditions of the area providing tax relief? Past research studies have provided conflicting answers to this question. Bartik (1991) concluded that rates of return to business tax incentives are likely to be greater for less affluent areas than for wealthier areas offering equivalent incentives. In contrast, Fisher and Peters (1998) determined that tax incentives tend only to offset higher taxes on businesses located in low income areas. This study examines this issue using a unique data set that allows for a fresh look at this issue. We find that the returns to subsidized investment are greater in lower unemployment and higher income areas. This suggests that tax incentives reinforce pre-existing economic differences across areas.
| Original language | English |
|---|---|
| Pages (from-to) | 236-250 |
| Number of pages | 15 |
| Journal | Growth and Change |
| Volume | 32 |
| Issue number | 2 |
| State | Published - Mar 2001 |
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All Science Journal Classification (ASJC) codes
- Development
Cite this
The Impact of Tax Incentives : Do Initial Economic Conditions Matter? / Goss, Ernest; Phillips, Joseph M.
In: Growth and Change, Vol. 32, No. 2, 03.2001, p. 236-250.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - The Impact of Tax Incentives
T2 - Do Initial Economic Conditions Matter?
AU - Goss, Ernest
AU - Phillips, Joseph M.
PY - 2001/3
Y1 - 2001/3
N2 - Do the returns to business tax incentives differ according to the initial economic conditions of the area providing tax relief? Past research studies have provided conflicting answers to this question. Bartik (1991) concluded that rates of return to business tax incentives are likely to be greater for less affluent areas than for wealthier areas offering equivalent incentives. In contrast, Fisher and Peters (1998) determined that tax incentives tend only to offset higher taxes on businesses located in low income areas. This study examines this issue using a unique data set that allows for a fresh look at this issue. We find that the returns to subsidized investment are greater in lower unemployment and higher income areas. This suggests that tax incentives reinforce pre-existing economic differences across areas.
AB - Do the returns to business tax incentives differ according to the initial economic conditions of the area providing tax relief? Past research studies have provided conflicting answers to this question. Bartik (1991) concluded that rates of return to business tax incentives are likely to be greater for less affluent areas than for wealthier areas offering equivalent incentives. In contrast, Fisher and Peters (1998) determined that tax incentives tend only to offset higher taxes on businesses located in low income areas. This study examines this issue using a unique data set that allows for a fresh look at this issue. We find that the returns to subsidized investment are greater in lower unemployment and higher income areas. This suggests that tax incentives reinforce pre-existing economic differences across areas.
UR - http://www.scopus.com/inward/record.url?scp=0346403967&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=0346403967&partnerID=8YFLogxK
M3 - Article
VL - 32
SP - 236
EP - 250
JO - Growth and Change
JF - Growth and Change
SN - 0017-4815
IS - 2
ER -