Few States Evaluate Effectivesness of Incentives
A report by the Pew Center on the States examines the quality and scope of states’ evaluations of their tax incentives for economic development. The study comes at a time when most states are trying to rebuild their budgets and many have not regained private-sector jobs lost during the Great Recession. Thirteen states were identified as leaders; 12 were found to have mixed results; and half the states have not taken the basic steps needed to know whether their incentives are effective. While no one knows the exact total, policymakers spend billions of dollars annually on tax incentives for economic development. States that have conducted rigorous evaluations of some incentives virtually ignore others, or evaluate infrequently. Others regularly examine these investments but not thoroughly enough. Comprehensive evaluations of tax incentives are critical in order to determine if they deliver a strong return on investment. The Pew study doesn’t take a position on whether tax incentives are good or bad, but does identify approaches to evaluation. For complete details, visit www.pewcenteronthestates.org.