Does Tax Increment Financing Pass the "But-for" Test in Missouri?. Issue 3 (August 2019)

• Record Type: Journal Article
• Authors: El-Khattabi, Ahmed Rachid; Lester, T. William
• Is Part Of: Economic development quarterly. Volume 33:Issue 3(2019)
• Page Start: 187
• Page End: 202
• Publication Date: 2019-08
• Subjects: tax increment financing -- economic development incentives -- economic impact; Economic development -- Periodicals; Economics -- Periodicals; United States -- Economic conditions -- Periodicals; 330.973
• DOI: 10.1177/0891242419859097
• Languages: English
• ISSNs: 0891-2424

Abstract

The use of tax increment financing (TIF) remains a popular, yet highly controversial, tool among policy makers in their efforts to promote economic development. This study conducts a comprehensive assessment of the effectiveness of Missouri's TIF program, specifically in Kansas City and St. Louis, in creating economic opportunities. We build a time-series data set starting 1990 through 2012 of detailed employment levels, establishment counts, and sales at the census block-group level to run a set of difference-in-differences with matching estimates for the impact of TIF at the local level. Although we analyze the impact of TIF on a wide set of indicators and across various industry sectors, we find no conclusive evidence that the TIF program in either city has a causal impact on key economic development indicators.