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Tax Increment Financing and Education Expenditures: The Case of Iowa

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  • Phuong Nguyen-Hoang

    (Public Policy Center and School of Urban and Regional Planning, University of Iowa)

Abstract

This is the first study to directly examine the relationship between tax increment financing (TIF) and education expenditures, using the state of Iowa as a case study. I find that greater use of TIF is associated with reduced education expenditures. I also find little evidence to support the commonly held proposition that school spending increases when TIF districts expire. Finally, the negative price effect of TIF on education spending is increasingly larger for school districts in lower wealth or income groups compared with their counterparts in higher wealth or income groups. The negative, though small, effect of TIF on education spending, coupled with no gain from the often-claimed long-run benefits of TIF, justifies policy measures to protect school districts from TIF. © 2014 Federal Reserve Bank of New York

Suggested Citation

  • Phuong Nguyen-Hoang, 2014. "Tax Increment Financing and Education Expenditures: The Case of Iowa," Education Finance and Policy, MIT Press, vol. 9(4), pages 515-540, October.
    • Handle: RePEc:tpr:edfpol:v:9:y:2014:i:4:p:515-540
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    3. Daphne Kenyon & Robert Wassmer & Adam Langley & Bethany Paquin, 2020. "The Effects of Property Tax Abatements on School District Property Tax Bases and Rates," Economic Development Quarterly, , vol. 34(3), pages 227-241, August.

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    More about this item

    Keywords

    tax increment financing; TIF; education expenditures; education;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
    • J10 - Labor and Demographic Economics - - Demographic Economics - - - General

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