DO LOCATION‐BASED TAX INCENTIVES IMPROVE QUALITY OF LIFE AND QUALITY OF BUSINESS ENVIRONMENT?

We examine how location‐based tax incentives affect quality of life and business environment through changes in property values and equilibrium wages. Using the federal Empowerment Zone program, we determine whether offering tax incentives to firms improves the welfare of the citizens and attractiveness to firms. We demonstrate that quality of life methodologies can be applied using small geographically aggregated data, such as census block groups. We find that the tax incentives offered by the program notably enhances the quality of business environment for firms in the area while modestly improving the quality of life for the individuals living in the area.     

Distinguishing Development Incentives from Developer Give-Aways: A Critical Guide for Development Practitioners and Citizens

The vast majority of communities offer financial incentives to private businesses and, among these, tax incentives remain the most widely used. Tax and other financial subsidies used to attract firms account for the bulk of public resources spent on economic development. Yet the interests of city residents—especially those marginalized in city politics—generally are not a key consideration in the fashioning of incentives. Using a hypothetical abatement proposal, this article highlights nine key questions that must be addressed to understand the potential benefits to the community of tax incentive programs. This exercise demonstrates how proponents of incentive deals typically overvalue benefits. By asking the right questions and conducting their own analysis, citizens can arrive at a more realistic estimate of net benefits.     

Regulating Local Tax Abatement Policies

This article addresses several questions about property tax. abatements in the United States, all directed at why tax abatements should be regulated more closely, and one question about how this might be accomplished. First, are tax abatements “job increment financing” since they are exchanged for future jobs? Public decisionmakers assume that jobs mean tax revenues, but problems emerge when abatements are granted without knowledge of expected jobs, or if local government administrators and planners have no means of holding businesses accountable if their promises are not kept. Second, are local decisionmakers behaving imprudently when they abate multiyear taxes? Using abatements may not always be a particularly prudent way of using public resources. Third, can tax abatements undermine local democracy? Abatements weaken public involvement in city government when citizens have few opportunities to debate decisionmakers about tax exemptions, but they should have such a chance because abatements have costly, longlasting effects on current and future citizens. Fourth, do abatements create social costs? Tax abatements generate external effects for those who are not party to the politics of tax exemptions, but there are no easy answers about how to correct the externalities. Finally, what are the options for stopping tax abatements? These include federal prohibition, cooperative agreements, federal fiscal incentives, the courts, tougher negotiating tactics, and more stringent contractual provisions by urban planners and administrators.     

Treatment or Placebo: Are State Programs Decreasing the Proportion of Uninsured?

Currently there are over 45 million Americans without health insurance. Recent growth in Medicaid and State Children's Health Insurance Program (SCHIP) enrollment of children has filled in the sizable gap created by decreased employer‐sponsored insurance since 2000. While the share of children who are uninsured actually decreased between 2000 and 2003, little progress was made in expanding public insurance to adults. As a result, advocates and policymakers at the federal and state level are searching for approaches to deal with the growing number of the uninsured. Conservatives advocate encouraging individuals to buy private insurance while liberals advocate the provision of health coverage through publicly financed health care. Using a 50‐state multilevel individual growth model, this study estimates the net effect of two state approaches in terms of reducing the uninsured: tax incentives (the conservative approach) and direct‐coverage programs (the liberal approach). The results suggest that these approaches have not achieved the results that many advocates had suggested. In the case of tax incentives, the results suggest that states with tax incentives experience increases in the rate of the uninsured. In the case of direct‐coverage programs, results suggest that states receive no relief in the number of uninsured individuals. Finally, the analysis suggests that the efforts originating at the federal level are most successful. These programs are a continuation of the incremental approach policymakers in America have taken to address the problem of the uninsured, rather than taking steps toward a truly comprehensive solution.     

DO LOCATION‐BASED TAX INCENTIVES ATTRACT NEW BUSINESS ESTABLISHMENTS?*

ABSTRACT This paper examines how offering tax incentives in a local area affects the entry of new business establishments. We use the federal Empowerment Zone (EZ) program as a natural experiment to test this relationship. Using instrumental variables estimation, we find that the EZ wage tax credit is responsible for attracting about 2.2 new establishments per 1,000 existing establishments, or a total of 20 new establishments in EZ areas. New establishment growth is strongest in the retail (about 40 new establishments) and service (about five new establishments) sectors, and offset by declines or slower growth in other industries.     

Rural Opportunities: Minimalist Policy and Community-Based Experimentation

Rural America's experiences with federal policies provide lessons on both the benefits and liabilities of minimalist policy attention and community-based policy experimentation. Prior to the New Deal federal rural policies promoted incentives to settle vast territories, subsidize private development of internal market structures, and invest in the benefits of higher education. The New Deal redirected rural policies to more narrow foci on the farm economic and environmental crises. These new, more centralized policies were built upon the rapid expansion of the Department of Agriculture into the first modern federal bureaucracy, politically legitimized on the basis of community-based policy experimentation. The seemingly unintended consequence of these emergency efforts to rescue farming was the marginalization of most non-farm policy concerns. The resulting minimalist federal approach to rural America was due to the absence of a unified national constituency for rural concerns. Understanding rural America's inadvertent experimentation in minimalist policy attention and in community-based policy structures can inform current policy initiatives to decentralize federal authority.     

Private production,collective consumption,and regional population structure: the interactions between public and private good provision as determinants of community composition

"Theories of trade and migration explain the distribution of individuals among regions based on private good productivities. The theory of local public goods (LPG's) uses collective good consumption economies to explain the size and composition of communities. This essay combines the two theories, to explore regional population heterogeneity and stability. Assuming that individuals must consume and produce in the same jurisdiction, the paper examines the nature of efficient allocations, the tensions between the private and public incentives, the nature of the equilibrium (if any) which migration among jurisdictions will generate, and how such equilibrium will depend on tax rules for sharing the costs of the LPG."     

Policy by Doing: Formulation and Adoption of Policy through Government Leadership

Do government choices, rather than legislative policies (i.e., mandatory regulations or incentives), influence the choices private actors make? In this article we develop a concept of “policy by doing,” which examines the power of government actions as hortatory tools to encourage other community members to act. “Policy by doing” can be an attempt to shape outcomes by providing symbolic leadership, reducing uncertainty, creating market, and telegraphing actions. Empirical analysis of privately held green buildings in 591 U.S. cities from 2004 to 2010 suggests that when governments increase their own commitment to green building for their facilities; private actors will be more likely to build green. We find that the actions of local governments, rather than those of state or federal, exert the strongest substantive influence on private decision making. Our findings contribute to understanding how governments can augment existing policy regimes by modeling the behavior they hope to inspire in other actors.     

INFLATION, PROGRESSIVITY, AND STATE INCOME TAX REVENUES

The combination of progressive income tax structures and inflation has led to significant increases in state income tax revenues. While the federal government has de facto indexed the federal personal income tax, states have generated large relative and absolute increases in their income tax revenues. This paper shows that the ratio of income tax revenues to personal income has grown significantly more in states with progressive income tax structures than those with proportional tax structures. Almost half of such increases may be attributed to inflation. The increase in the relative share of income tax as a source of state revenues has recently run into resistance in some states which have installed income tax indexation measures. This may suggest that the marginal cost of raising revenue through inflation, relative to other means (taxes), is reaching its limits.     

DEPRECIATION PROFILES AND DEPRECIATION POLICY IN A SPATIAL CONTEXT*

This paper demonstrates that the treatment of depreciation in the federal tax code is nonneutral not only with respect to assets and industries, as demonstrated in a number of recent studies, but also with respect to location. Using a unique set of data for manufacturing plants in Los Angeles and Philadelphia, the paper shows that the 1981 Tax Act's reduction of equipment lives to five years is likely to create differences in effective tax rates and wedges between the sample metropolitan areas for groups of plants with the same two-digit industrial classification. These are attributable to spatial differences in corporate tax rates and the type and quality of assets used. The paper concludes by explaining how the results can be generalized to other sectors and metropolitan areas, and by noting some implications for policy.     

THE IMPACT OF MARGINAL BUSINESS TAXES ON STATE MANUFACTURING

We estimate the impact of manufacturer business taxes on value added during the 1990s for 15 manufacturing sectors in 20 U.S. states. When the tax climate is properly measured as the potential liability arising from new investment in a state, we estimate that a 10 percent reduction in the effective tax liability is associated with a 3.5 to 5.3 percent increase in value added for the state's targeted manufacturing industry. When we isolate the value of industrial incentives from the basic tax system in our theoretically preferred marginal tax measure, we find that a 10 percent reduction in liability achieved by way of lowering taxes is associated with a 4.5 percent increase in value added while an equivalent reduction achieved by way of increasing incentives is associated with only 1.2 percent industrial growth, the latter elasticity not statistically different from zero.     

THE LONG-RUN ECONOMIC IMPACTS OF FEDERAL,STATE, AND LOCAL FISCAL POLICIES IN METROPOLITAN AREAS*

ABSTRACT. This paper uses new estimates of metropolitan factor demand and output supply functions to study how federal, state, and local fiscal policies affect metropolitan economies. We illustrate our work with findings for ten metropolitan areas in five states for changes in state corporate income taxes, local property taxes, the federal corporate income tax, an investment tax credit, interest rates, public capital stocks, output prices, and tax and regulatory policies affecting gross wages. It is clear from these simulations that a policy that is nominally the same everywhere will have repercussions that vary widely across regions and cities.     

THE STRUCTURE OF METROPOLITAN FACTOR AND PRODUCT MARKETS*

ABSTRACT. In this study we use a translog profit function and iterate seemingly unrelated regressions to estimate a system of factor demand and output supply functions for metropolitan economies. Our sample includes all metropolitan areas defined by the Census in 1977 for the period 1962 to 1982. Estimation shows that all price elasticities are elastic and that the signs are as expected. These results hold true for virtually all model specifications. Our findings indicate that federal, state, and local tax policies have significant impacts on factor demand and output supply. Public investment plays a positive and significant, but small, role in increasing output and in complementing other factors, although this influence has declined over time. Additionally, capital provided by the private sector has a substantially larger impact on output and employment than does capital provided by the public sector.     

Matching Rates and Mandates: Federalism and Children's Medicaid Enrollment

An important focus of the federalism literature has been on analyzing the responses of lower levels of government to the financial incentives of intergovernmental grant programs. But grant conditions and mandates are also important features of grant programs, and these have received considerably less attention in the literature. This article examines the implementation of federal Medicaid mandates during the 1980s and 1990s to explicitly compare the relative responses of the states to matching rate incentives and statutory mandates. Using individual-level information on program enrollment to measure policy implementation, the results indicate that the federal mandates led to large changes in children's Medicaid enrollment. In contrast, the effects of the federal matching rate were much more limited. Moreover, the statutory mandates not only raised the average level of enrollment but also reduced the degree of policy variation across the states. While the current pattern of federal Medicaid matching payments reduces policy variation to some extent, these effects are modest compared to the impacts of the mandates. Mandates are a more powerful instrument for national policymakers than the comparatively weak fiscal incentives provided by matching rates.     

“Wilderness” revisited: Is Canadian park management moving beyond the “wilderness” ethic?

This paper questions whether the rescaling of conservation practice in Canada to include local and Indigenous communities, NGOs, and private market-based actors represents a move away from wilderness-thinking in conservation, and what implications this might have for the future of conservation in Canada. We explore the links between Cronon's “wilderness” ethic and coloniality, racism/sexism/classism, and political economy, and the extent to which recent trends in conservation practice, such as co-management arrangements, private tourism proposals, and a shift in programming to attract a diverse public to parks, help us to move beyond the limited vision for conservation and environmentalism that the wilderness ethic provides. We interrogate the ways in which the concept of wilderness is being employed, resisted, and transformed by a multitude of actors in three parks and conservation areas across Canada. We argue that although recent developments in conservation practice help to redress some of the worrisome aspects of wilderness-thinking in parks, they also reinforce and re-emphasize problematic lines of thinking and praxis. While the wilderness character of Canadian parks has shifted a great deal since the turn of the 20^th century, the wilderness ethic remains deeply embedded within conservation discourse and practice.     

Funding Faction or Buying Silence? Grants,Contracts, and Interest Group Lobbying Behavior

During the past decade, numerous congressional bills and amendments have attempted to curtail lobbying by nonprofit organizations that receive federal grants. These policy efforts grow out of an assumption that federal funds are encouraging advocacy at levels that are excessive and encourage additional government spending. Using survey data on more than 700 organizations based in Washington, DC, this article tests this assumption. The data show that for the most part, organizations receiving federal grants and contracts lobby no more frequently than similar organizations that do not receive such benefits. The exception is contacting federal agencies, which charitable organizations receiving federal funds do slightly more often than similar organizations without such funds. A multivariate analysis assesses federal funding together with other variables theorized to affect lobbying—federal tax status, resource levels, and the nature of the lobbying issue—confirming that while these other variables affect lobbying levels, federal funding does not.     

Institutions,Incentives, and Policy Entrepreneurship

Policy entrepreneurship is often used to explain agenda setting through reference to the behavior of individual “change agents.” But there are still gaps in our understanding of what motivates entrepreneurs. Rational choice theory emphasizes the importance of material and nonmaterial incentives; however, it remains unclear what role institutions play. This article aims to empirically examine the relationship between incentives and institutional encouragement of innovation. Using a case study of the federal government of Canada, I find evidence that incentives matter. Government agencies with many incentives are more likely to encourage innovation than agencies with few incentives. These results underscore the importance of institutions in determining the motivations of policy entrepreneurs, and suggest future research should focus on the interplay among individual, political, and institutional factors.     

The Politics of Motor Fuel Taxes and Infrastructure Funds in France and the United States

The US. and France have adopted contrasting models of motor fuel tax and highway finance policy. Fuel tax revenues are dedicated to state and federal highway funds in America, keeping taxes quite low, but preventing them from contributing to the general treasury. French motor fuel taxes are higher and make up nearly 11 percent of the central government's general revenues, excluding social security contributions. French highway finance relies heavily on tolls. Pressure from the US. federal deficit has reduced the highway trust fund's ability to protect highway spending from budgetary competition. Political and procedural changes in Congress make it likely that the U.S.will move away from exclusive dedication of motor fuel taxes.     

Wood Chipping of Indigenous Forest on Private Land in New Zealand 1969–1993

In recent decades the international wood chip industry has been the major cause of indigenous forest destruction in New Zealand. This paper analyses how changing state forest policies have affected wood chipping of indigenous forest. Emphasis is placed on wood chipping on private land through a case study of the reactions and changing attitudes of farmers. It is argued that farmers and Maori landowners often have no other alternative but to allow wood chipping on their land. Although government policies have been tightened in recent years, and although attitudes among private landholders are shifting towards forest conservation, the pressure on New Zealand's lowland indigenous forest remnants continues unabated.     

Private Business Investments in Heritage Sites in Tanzania: Recent Developments and Challenges for Heritage Management

Private business investments in heritage sites in Tanzania have recently captured scholarly interest of some archaeologists. Curiosity in the matter has largely emanated from a fundamental need to widen the sites’ utilization through heritage tourism. This paper reviews a recent incident in which a local community explicitly opposed the minister of Natural Resources and Tourism handing over ceremony of Kunduchi ruins site to a private investor. The paper also highlights recent developments, problems in private business investments, and their potential implications to the conservation and management of heritage sites in Tanzania.