The effective use of property tax incentives for economic development
To make property-tax incentives for business more effective, do not approve every incentive request, target use of incentives, avoid incentive wars, cooperate with surrounding localities, and conduct regular evaluations.
Temporary partial expensing in a general-equilibrium model
This paper uses a dynamic general-equilibrium model with a nominal tax system to consider the effects of temporary partial expensing allowances on investment and other macroeconomic aggregates.
Spotlight: Texas wind energy: tax breaks, transmission lines key to growth
Texas became the nation's most prolific generator of wind power in the past decade, but the industry's future growth will depend on tax incentives to make it cost competitive and new transmission lines to get electricity to consumers.
Evaluating business tax credits: reading between the lines
This policy brief provides guidelines for critically evaluating and interpreting empirical studies of state business tax credits. This brief summarizes analysis in NEPPC discussion paper 09-3: State Business Tax Incentives: Examining Evidence of their Effectiveness.
Investment, accounting, and the salience of the corporate income tax
This paper develops and tests the hypothesis that accounting rules mitigate the impact of tax policy on investment decisions by obscuring the timing of tax payments. I model a firm that maximizes a discounted weighted average of after-tax cash flows and accounting profits. The cost of capital and the impact of tax incentives for investment both depend on the weight placed on accounting profits. I estimate this weight by comparing the effectiveness of tax incentives that do and do not affect accounting profits. Investment tax credits, which do affect accounting profits, have more impact on ...
State business tax incentives: examining evidence of their effectiveness
State governments commonly use business tax credits to promote economic development. Whether these incentives are successful at generating new economic activity - and whether they do so in a cost-effective manner - are important concerns, particularly in times of fiscal and economic stress. This paper explores the use and effectiveness of a selected group of incentives, namely tax credits geared toward capital investment, research and development, job creation, and film production. The paper examines the various credits offered by New England states and their structural features, and reviews ...
A retrospective evaluation of the effects of temporary partial expensing
This paper examines how business investment responded to temporary partial expensing, first enacted in 2002 and expanded in 2003. In principle, partial expensing boosted the incentive to invest which should have had a discernable impact on spending. However, the tax changes did not occur in a vacuum, so it is challenging to isolate their impact. Our empirical approach exploits a feature of the tax change which, under certain assumptions, allows us to cleanly estimate its impact. Specifically, partial expensing provided relatively generous tax treatment for long-lived assets. We use this ...