Weekly Round-Up: New Study Looks at Effectiveness of State Incentives


States, in their bid to strengthen economies in the aftermath of the recession, continue to rely heavily on tax incentives but generally do not make good use of outcome measurements, according to a new research report reviewed by Bloomberg BNA Correspondent William H. Carlile in this week’s issue of the Bloomberg BNA Weekly State Tax Report.

The study, by the Washington, D.C.-based Pew Center on the States, said that half the states have not taken basic steps to produce and connect policymakers with good evidence of whether these tools deliver a strong return on taxpayer dollars.

Incentives states use to encourage businesses to locate, hire, expand, and invest within their borders include tax credits, exemptions, and deductions.

The center identified 13 states as leaders in generating much-needed answers about tax incentives' effectiveness: Arizona, Arkansas, Connecticut, Iowa, Kansas, Louisiana, Minnesota, Missouri, New Jersey, North Carolina, Oregon, Washington, and Wisconsin.

Twelve states have mixed results. The other 25 states, along with Washington, D.C., lag behind.

Some states, the study noted, lead because of the scope of their assessments, reviewing major tax incentives and taking steps to integrate the results into policy and budget deliberations. Oregon, for example, gives its incentives expiration dates, or “sunsets,’’ which force lawmakers to examine them periodically. Arizona, Iowa, and Washington also are trying to ensure their evaluations become part of the policymaking process.

For Carlile’s complete look at this report, check out this week’s issue of the Bloomberg BNA Weekly State Tax Report.

In other developments…

For a look at a new law in Maryland that creates health enterprise zone credits for certain health care practitioners, check out Bloomberg BNA’s Kathleen Caggiano’s story in this week’s issue of the Bloomberg BNA Weekly State Tax Report, which can be read in its entirety here.

Bloomberg BNA State & Local Tax Interview with Ethan D. Millar: Practitioner Questions the Expanded Sweep of Unclaimed Property Audits and the States’ Focus on Generating Revenues.

Massachusetts greases the skids for lubricant manufacturer to use single sales factor, Sutherland SALT writes.

State tax collections per capita, from the Tax Foundation’s Nick Kasprak.

Compiled by Priya D. Nair
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