Year: 2007
Type: article
Abstract: State governments increasingly use financial incentives to target and attract firms. The literature on state supported development reports mixed results at best as to whether there are net economic benefits to the state economy. Little has been done, however, to investigate the benefits that politicians may receive by offering incentives. We hypothesize that state governments benefit from offering financial incentives. Specifically, we use pooled cross sectional data from 1981 and 1989 to develop a model to test whether a state government offering financial incentives increases state corporate tax revenue. We argue that increases in state corporate tax revenue may explain why it is in the government’s interest to target firms regardless of net economic benefit of financial incentives.
DOI: 10.68479/001c.9287
Authors: Peter T. T. Calcagno, Frank Hefner
Institution: College of Charleston
Language: English
Subfield: Economics and Econometrics
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W1489340687