Two recent reports offer interesting reading and very different takes on economic development incentives.

Seeding Growth: Maximizing the Return on Incentives” comes from the International Economic Development Council’s Economic Development Research Partners. It addresses managing the incentives portfolio and calculating returns to the community.

Managing the portfolio reviews topics we’ve also addressed previously, including:

  • Setting the context for incentive use, including developing strategic plans and thinking regionally
  • Designing effective programs that have a clear objective, reward performance and include a plan for evaluation
  • Creating incentive agreements that clearly define terms and metrics
  • Communicating with stakeholders

The report also offers guidance on key issues and challenges in calculating returns, plus reviews of different approaches, such as cost-benefit analysis, fiscal impact, economic impact and social return on investment.

Tax Breaks and Inequality,” prepared by Good Jobs First, argues that economic development incentives are one factor among many that contribute to income inequality in the US. The premise is that these incentives “serve mainly to increase profits,” thereby primarily benefiting owners of private companies and stockholders of public companies. The analysis focuses on the connection between corporations receiving incentives and members of the Forbes 400.

This report goes on to state that this pattern also exacerbates inequality by effectively requiring other taxpayers to take on a greater share of total taxes and, in many cases, rewarding companies that pay low wages.

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