Business Taxation

Business Taxation

Business tax incentives lower taxes paid by target business in order to promote a public goal. Such policies include business property tax relief, tax increment financing, Enterprise Zones, and Illinois’ High Impact Business Program. Together these incentives, and particularly tax increment financing, represent a substantial investment in Illinois’s public works and infrastructure.

IGPA’s Business Tax policy initiative brings together experts in economics and public finance to evaluate the effects of such policies on the health and productivity of state and local businesses and the state government. The researchers seek to measure the direct effect on firms that receive tax incentives as well as the indirect effect on nearby firms that do not receive incentives. 

The research approach is based on long-established scholarly theory. The researchers are also contributing new ideas to the policy conversation. For example, the research emphasizes the role of local government market power in setting optimal levels of incentives. The scholars focus on trade-offs between taxes and business incentives.

The initiative compiles original data on business taxes and business tax incentives from a variety of sources. The researchers also work with Illinois government agencies to obtain access to non-public data on local economic conditions when appropriate. The goal of the initiative is to inform and improve the design of local and state business tax and incentive policy in Illinois.

Share:

There is an important balance to strike between the revenue business taxes generate, and the effects they have on the business climate and economy. We seek to provide solid evidence on the effects of business taxation so that elected officials can make informed decisions about future policy.

Lead Experts

Expertise: Economic Policy

David F. Merriman's major area of study is state and local public finance. Merriman directs The Fiscal Futures Project, which created and maintains of a comprehensive and consistently defined measure of the Illinois state budget.  He has published extensively about the effect of tax increment finance policy on local economic growth and the determinants of tobacco tax avoidance. He has also studied Walmart’s impact on urban economic development. His most recent research concerns state and local business taxation.

Affiliated Experts

Assistant Professor

Expertise: Economic Policy

Joshua Drucker is an Assistant Professor in the Urban Planning and Policy Department in the College of Urban Planning and Public Affairs at the University of Illinois at Chicago. His research interests center around processes of regional economic development and transformation. Recent projects include examining the role of industrial competition within regional economies, analyzing the contributions of anchor institutions to economic performance and resilience, and investigating innovation districts as an urban economic development strategy. Drucker has worked as an economic development consultant and researcher for the Technology Partnership Practice of the Battelle Memorial Institute, the North Carolina Department of Commerce, and the Southern Growth Policies Board.

Assistant Professor

Expertise: Economic Policy

Richard Funderburg is an Assistant Professor of Public Administration at the University of Illinois Springfield. Funderburg’s research centers on the ability and limitations of state and local economic development policy to entice private businesses to locate, start up, or expand within the region and the fiscal and budget consequences of public efforts. Funderburg’s research appears in several regional science and planning journals including the Journal of Regional Science, Environment and Planning A, Urban Studies, Transportation Research A, Journal of Environmental Planning and Management, Growth and Change, and Land Use Policy. Prior to his doctoral studies, Rick worked 10 years for the California Employment Development Department where he developed state plans, forecasts, budgets, legislation, and regulations pursuant to workforce investment, vocational education, and welfare-to-work programs.

Professor and Faculty Fellow, Great Cities Institute

Expertise: Economic Policy

Rachel Weber is a professor in the Urban Planning and Policy Department at the University of Illinois at Chicago where she conducts research in economic development, real estate, and public finance. She has expertise in the areas of urban and regional economic development, public finance, municipal government law, planning theory, andreal estate. She has conducted extensive research on the impact of changes in capital markets on urban economies and the built environment. She has also written on school and infrastructure finance, the effect of e-commerce on bricks-and-mortar retailers, the design of incentive contracts, and participatory budgeting. She is the co-editor of the Oxford Handbook of Urban Planning and author of From Boom to Bubble: How Finance Built the New Chicago (University of Chicago Press, 2015). Weber was appointed by Chicago Mayor Rahm Emanuel to the Tax Increment Financing Reform Task Force and was a member of the Urban Policy Advisory Committee for then-presidential candidate Barack Obama.