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.
IGPA pursued this initiative from 2017 to 2019.