Governments provide billions of dollars in tax incentives each year to encourage businesses to create and retain jobs and contribute to the economy. Yet, these tax deals do not always produce the intended results. Well-designed policies can have a positive impact on the fiscal health of a community, but poorly designed policies can have the opposite effect. We support organizations that are studying current tax policies and are helping state leaders craft more effective strategies.
LJAF funds The Pew Charitable Trusts’ Economic Development Tax Incentives project. The group is conducting research that is providing information about the budgetary risks and economic returns associated with tax credits, deductions, and exemptions. This work will help to ensure that state tax policies are regularly evaluated, grounded in evidence, and designed to guard against unanticipated costs.
In addition, we provide funding for the Tax Policy Center, a joint venture of the Urban Institute and the Brookings Institution. This entity is analyzing a variety of tax issues, including how the policies of one jurisdiction impact surrounding areas; the relationship between tax policies and long-term economic growth; and the use of corrective taxation to promote social and economic priorities such as reducing carbon emissions and improving public health. Our grant also supports the Center’s development of a website that will allow users to compare spending and taxes for all 50 states.