IDEAS home Printed from https://ideas.repec.org/a/sae/ecdequ/v15y2001i1p90-105.html
   My bibliography  Save this article

The Effect of State Tax Incentives on Economic Growth and Firm Location Decisions: An Overview of the Literature

Author

Listed:
  • Terry F. Buss

    (Suffolk University)

Abstract

This article reviews the tax study literature to assess the state of knowledge about the relationship among taxes, related factors, and economic growth as well as the use of tax incentives to influence business locations. Although tax studies have become increasingly sophisticated, especially during the past decade, they have tended to yield conflicting results regarding whether taxes matter. Some studies focus on costs and benefits of tax incentives, but few look to see whether public monies could have been better spent or whether tax incentives were economically justified. Tax studies offer little guidance to policy makers concerned about fine-tuning tax rates or tax offerings and effectively employing tax incentives as economic development tools.

Suggested Citation

  • Terry F. Buss, 2001. "The Effect of State Tax Incentives on Economic Growth and Firm Location Decisions: An Overview of the Literature," Economic Development Quarterly, , vol. 15(1), pages 90-105, February.
    • Handle: RePEc:sae:ecdequ:v:15:y:2001:i:1:p:90-105
    DOI: 10.1177/089124240101500108
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/089124240101500108
    Download Restriction: no
    File URL: https://libkey.io/10.1177/089124240101500108?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Rodney A. Erickson, 1987. "Business Climate Studies: A Critical Evaluation," Economic Development Quarterly, , vol. 1(1), pages 62-71, February.
    2. Peter S. Fisher, 1997. "Tax and spending incentives and enterprise zones," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 109-138.
    3. Timothy J. Bartik, 1994. "Better Evaluation Is Needed for Economic Development Programs to Thrive," Economic Development Quarterly, , vol. 8(2), pages 99-106, May.
    4. Donald N. Baum, 1987. "The Economic Effects of State and Local Business Incentives," Land Economics, University of Wisconsin Press, vol. 63(4), pages 348-360.
    5. Feldstein, Martin & Wrobel, Marian Vaillant, 1998. "Can state taxes redistribute income?," Journal of Public Economics, Elsevier, vol. 68(3), pages 369-396, June.
    6. John P. Blair & Robert Premus, 1987. "Major Factors in Industrial Location: A Review," Economic Development Quarterly, , vol. 1(1), pages 72-85, February.
    7. Thomas Dilorenzo, 1983. "Economic competition and political competition: An empirical note," Public Choice, Springer, vol. 40(2), pages 203-209, January.
    8. Ronald C. Fisher, 1997. "Effects of state and local public services on economic development," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 53-82.
    9. Alicia H. Munnell, 1992. "Policy Watch: Infrastructure Investment and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 6(4), pages 189-198, Fall.
    10. Courant, Paul N., 1994. "How Would You Know a Good Economic Policy if You Tripped Over One? Hint: Don't Just Count Jobs," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(4), pages 863-881, December.
    11. Leslie E. Papke, 1993. "What Do We Know about Enterprise Zones?," NBER Chapters, in: Tax Policy and the Economy, Volume 7, pages 37-72, National Bureau of Economic Research, Inc.
    12. Leah M. Cook & Alicia H. Munnell, 1990. "How does public infrastructure affect regional economic performance?," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 11-33.
    13. Timothy J. Bartik, 1992. "The Effects of State and Local Taxes on Economic Development: A Review of Recent Research," Economic Development Quarterly, , vol. 6(1), pages 102-111, February.
    14. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, August.
    15. Robert G. Lynch & Gunther Fishgold & Dona L. Blackwood, 1996. "The Effectiveness of Firm-Specific State Tax Incentives in Promoting Economic Development: Evidence from New York State's Industrial Development Agencies," Economic Development Quarterly, , vol. 10(1), pages 57-68, February.
    16. Newman, Robert J, 1983. "Industry Migration and Growth in the South," The Review of Economics and Statistics, MIT Press, vol. 65(1), pages 76-86, February.
    17. Schmenner, Roger W. & Huber, Joel C. & Cook, Randall L., 1987. "Geographic differences and the location of new manufacturing facilities," Journal of Urban Economics, Elsevier, vol. 21(1), pages 83-104, January.
    18. Courant, Paul N., 1994. "How Would You Know a Good Economic Policy If You Tripped Over One? Hint: Don't Just Count Jobs," National Tax Journal, National Tax Association, vol. 47(4), pages 863-81, December.
    19. Wim Wiewel, 1999. "Policy Research in an Imperfect World: Response to Terry F. Buss, “The Case Against Targeted Industry Strategiesâ€," Economic Development Quarterly, , vol. 13(4), pages 357-360, November.
    20. Timothy J. Bartik, "undated". "Better Evaluation is Needed for Economic Development Programs to Survive," Upjohn Working Papers tjb1994edq, W.E. Upjohn Institute for Employment Research.
    21. Keith R. Ihlanfeldt, 1995. "Ten Principles for State Tax Incentives," Economic Development Quarterly, , vol. 9(4), pages 339-355, November.
    22. Carroll, Robert & Wasylenko, Michael J., 1994. "Do State Business Climates Still Matter? -- Evidence of a Structural Change," National Tax Journal, National Tax Association, vol. 47(1), pages 19-37, March.
    23. Carroll, Robert & Wasylenko, Michael J., 1994. "Do State Business Climates Still Matter? -- Evidence of a Structural Change," National Tax Journal, National Tax Association;National Tax Journal, vol. 47(1), pages 19-37, March.
    24. Terry F. Buss, 1999. "The Case Against Targeted Industry Strategies," Economic Development Quarterly, , vol. 13(4), pages 339-356, November.
    25. Robert W. Wassmer, 1994. "Can Local Incentives Alter a Metropolitan City's Economic Development?," Urban Studies, Urban Studies Journal Limited, vol. 31(8), pages 1251-1278, October.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Calcagno, Peter T. & Hefner, Frank L., 2007. "State Targeting of Business Investment: Does Targeting Increase Corporate Tax Revenue?," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 37(2), pages 1-13.
    2. Darin Wohlgemuth & Maureen Kilkenny, 1998. "Firm Relocation Threats and Copy Cat Costs," International Regional Science Review, , vol. 21(2), pages 139-162, August.
    3. Michael Wasylenko, 1997. "Taxation and economic development: the state of the economic literature," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 37-52.
    4. Peter T. Calcagno & Henry Thompson, 2004. "State Economic Incentives: Stimulus or Reallocation?," Public Finance Review, , vol. 32(6), pages 651-665, November.
    5. Terry F. Buss & Laura C. Yancer, 1999. "Cost-Benefit Analysis: A Normative Perspective," Economic Development Quarterly, , vol. 13(1), pages 29-37, February.
    6. Theodore M. Crone, 1997. "Where have all the factory jobs gone - and why?," Business Review, Federal Reserve Bank of Philadelphia, issue May, pages 3-18.
    7. Andrew M. Isserman, 1993. "State Economic Development Policy and Practice in the United States: A Survey Article," International Regional Science Review, , vol. 16(1-2), pages 49-100, April.
    8. Daphne A. Kenyon, 1997. "Theories of interjurisdictional competition," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 13-36.
    9. Jeffrey Thompson, 2010. "Prioritizing Approaches to Economic Development in New England: Skills, Infrastructure, and Tax Incentives," Published Studies priorities_september7_per, Political Economy Research Institute, University of Massachusetts at Amherst.
    10. John Deskins & Brian Hill, 2010. "State taxes and economic growth revisited: have distortions changed?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 44(2), pages 331-348, April.
    11. W. Robert Reed, 2009. "The Determinants Of U.S. State Economic Growth: A Less Extreme Bounds Analysis," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 685-700, October.
    12. Ronald C. Fisher, 1997. "Effects of state and local public services on economic development," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 53-82.
    13. Yonghong Wu, 2010. "Property Tax Exportation and Its Effects on Local Business Establishments: The Case of Massachusetts Municipalities," Economic Development Quarterly, , vol. 24(1), pages 3-12, February.
    14. William H. Hoyt & J. William Harden, 2005. "MSA Location and the Impact of State Taxes on Employment and Population: A Comparison of Border and Interior MSA's," Working Papers 2005-01, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    15. Robert T. Greenbaum & Blair D. Russell & Tricia L. Petras, 2010. "Measuring the Distribution of Economic Development Tax Incentive Intensity," Economic Development Quarterly, , vol. 24(2), pages 154-168, May.
    16. Howard Chernick, 1997. "Tax Progressivity and State Economic Performance," Economic Development Quarterly, , vol. 11(3), pages 249-267, August.
    17. Kusmin, Lorin D., 1994. "Factors Associated with the Growth of Local and Regional Economies: A Review of Selected Empirical Literature," Staff Reports 278733, United States Department of Agriculture, Economic Research Service.
    18. Jill L. Tao & Richard C. Feiock, 1999. "Directing Benefits to Need: Evaluating the Distributive Consequences of Urban Economic Development," Economic Development Quarterly, , vol. 13(1), pages 55-65, February.
    19. Teresa Garcia-Milà & Therese J. McGuire, 2001. "Tax incentives and the city," Economics Working Papers 631, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 2001.
    20. Wallace E. Oates & Wallace E. Oates, 2004. "Fiscal Competition and European Union: Contrasting Perspectives," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 10, pages 182-194, Edward Elgar Publishing.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ecdequ:v:15:y:2001:i:1:p:90-105. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.