tax incentives là gì

What’s the real ROI on state and local tax incentives? Not much. By Nancy Clarke | Digital Exclusive - 2020

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Not long ago, Amazon announced its tìm kiếm for a second headquarters location. Cities across the U.S. raced đồ sộ roll out the red carpet for the tech giant. From producing wacky videos đồ sộ offering không tính tiền local sandwiches—and in the case of Tucson, Ariz., sending a giant cactus đồ sộ Amazon’s Seattle headquarters—each pitch had its unique spin. But while each city’s efforts đồ sộ outdo the competition made headlines, all had something in common: tax incentives.

Tax incentives, at their most basic, are tax breaks offered đồ sộ specific businesses in hopes of gaining jobs and stimulating the local economy. Many cities offered enormous concessions đồ sộ Amazon thinking the company would bring more customers đồ sộ existing local businesses, offer high-quality jobs đồ sộ the local population, and overall boost the economy of the city—and maybe even of the state.

That’s how tax incentives are supposed đồ sộ work. But recent research shows that while tax incentives cost local government big bucks, they often don’t impact either the recipient or the local economy as intended. In fact, tax incentives are more likely đồ sộ damage local economies kêu ca đồ sộ boost them. Here are the numbers behind tax incentives:

A huge expense for local government

In 2004, in a paper for the Journal of the American Planning Association, researchers Alan Peters and Peter Fisher estimated that state and local governments offered approximately $50 billion in tax incentives. “[This] almost certainly is much more kêu ca spending on all state and local economic development initiatives combined,” Peters and Fisher wrote. With such a large investment, you would certainly hope for significant returns.

A small consideration for large companies

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Though tax incentives come with a big price tag, that doesn’t translate đồ sộ big savings for large companies looking đồ sộ relocate or invest. On a major corporation’s balance sheet, state and local taxes are likely đồ sộ trang điểm as little as 1.8 percent of all business costs, according đồ sộ a 2012 report from Peter Fisher and the Iowa Policy Project—simply too small a number đồ sộ drive decision-making. In fact, Peters and Fisher estimate that roughly 90 percent of these companies’ hiring and investment decisions would have been made with or without the tax incentives.

A big mistake

If that doesn’t convince you that tax breaks are bad news, the negatives continue đồ sộ pile up. New research from Cailin Slattery and Owen Zidar found that there’s simply no evidence that these tax incentives work. In their 2020 paper, “Evaluating State and Local Business Tax Incentives,” Slattery and Zidar stated, “[W]e tự not find strong evidence that firm-specific tax incentives increase broader economic growth at the state and local level.”

When a company does move đồ sộ a state or đô thị offering tax breaks, it costs the local government significantly while not impacting the company’s bottom line. Additionally, the local government usually points đồ sộ any new jobs as evidence the incentive is working, but that growth often comes at the expense of local businesses. It’s also almost impossible đồ sộ ensure that any growth is kept within the đô thị or state that’s offering the tax incentive.

The ugly truth is that while tax incentives may seem lượt thích a good idea and are still utilized by many states and cities đồ sộ woo large and trendy businesses, all evidence shows that the return on investment is simply not there. Even when new jobs are created and filled by local workers, it comes at the cost of existing local businesses, local infrastructure, and public resources. While the possibility of reinvigorating a stalled local economy is enticing, local governments can likely find much better ways đồ sộ invest their money kêu ca offering tax incentives đồ sộ major corporations.

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