Evaluating State Tax Incentives for Jobs and Growth

In the wake of the Great Recession, states have to do more with less–so every
dollar counts. Lawmakers are looking to get their fiscal houses in order, deliver
critical services more effectively and at a lower cost, and invest where the proven
returns are greatest, in areas that will generate dividends over the short and long
term. The Pew Center on the States works on a range of important issues to help
them do just that.

States spend billions of dollars annually on tax incentives for economic
development, offering businesses credits, exemptions, and deductions to locate,
hire, expand and invest within their borders. But this report, Evidence Counts,
finds that half the states have not taken basic steps to produce and connect
policy makers with good evidence of whether these tools deliver a strong return
on taxpayer dollars. This knowledge gap is particularly worrisome at a time of
tight budgets and sluggish economic growth. If policy makers do not base their
decisions about tax incentives on good information, they could be spending scarce
resources unwisely. On the other hand, if they do not use these incentives or use
them well, they could be missing out on opportunities to create jobs and attract
new businesses.

This report builds on Pew’s efforts to provide decision-makers with important
information about both the fiscal challenges they face and data-driven policy
options. We hope this work will inform and guide state leaders as they chart a
path toward recovery today and sustainability tomorrow.

Sincerely,

Susan Urahn

Managing Director, Pew Center on the States

Full Report: http://www.pewcenteronthestates.org/uploadedFiles/015_12_RI%20Tax%20Incentives%20Report_web.pdf