A report released this week by Pew Charitable Trust provides new insights into how states can regularly evaluate their use of economic development tax expenditures to ensure that the intended outcomes are being achieved and inform decisions about ongoing commitment of public dollars to those efforts. Just this week the Budget & Tax Center highlighted the importance of such an approach as a way to reduce investments in policies that have proven ineffective and address the revenue shortfall.
Indeed by strengthening the capacity of North Carolina to evaluate tax expenditures, policymakers can make sure that public dollars are put to work building a stronger economic foundation through proven strategies like education. As the Pew report notes, 10 states and the District of Columbia have passed laws since 2012 to require regular evaluation of economic development tax expenditures. The report largely focuses on tax credits available to all businesses in a qualifying industry, rather than on individual tax incentive “deals” signed with specific companies, but the findings are equally important for those types of corporate subsidies. Here are some key findings from their review of other state practice: Read More