The Determinants of Tax-Based Incentives: An Empirical Analysis of State Governments. Issue 6 (2nd November 2022)

• Record Type: Journal Article
• Authors: Lee, Hakyeon; Butler, J. S.
• Is Part Of: Public performance & management review. Volume 45:Issue 6(2022)
• Page Start: 1431
• Page End: 1460
• Publication Date: 2022-11-02
• Subjects: Determinants -- economic development policies -- political ideology -- state governments -- tax-based incentives; Civil service -- Labor productivity -- Periodicals; Civil service -- Labor productivity -- United States -- Periodicals; Government productivity -- Periodicals; Government productivity -- United States -- Periodicals; Public administration -- Periodicals; Public administration -- United States -- Periodicals; Civil service -- Labor productivity; Government productivity; Public administration; United States; Periodicals; 351.05
• DOI: 10.1080/15309576.2022.2115089
• Languages: English
• ISSNs: 1530-9576

Abstract

Abstract: To determine why state governments often use tax-based incentives, this study focuses on five major tax-based incentives: job creation tax credits, investment tax credits, R&D credits, property tax abatements, and customized job training subsidies. The statistical results indicate that a state government's prevailing political ideology influences the choice of economic development activities. Accordingly, a more liberal state is less likely to use property tax abatements and customized job-training subsidies, and more likely to use job creation tax credits and R&D tax credits. Further, competition does not operate to trigger tax-based incentives. State economic conditions are not significantly related to the use of incentives. This result could imply the prevalence of political factors in the use of incentives.