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Fiscal Pressure, Tax Competition and the Adoption of Tax Increment Financing

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  • Joyce Y. Man

    (School of Public and Environmental Affairs, Indiana University, 801 W. Michigan Street, BS/SPEA 4078, Indianapolis, IN 46202, USA, Yman@iupui.edu)

Abstract

Tax increment financing (TIF) has been widely adopted as an economic development tool by municipalities. This study estimates a structural probit model of municipal TIF adoption decisions using data drawn from cities in Indiana. It provides empirical evidence that factors such as fiscal pressures, tax competition, economic distress, industrial composition, availability of alternative programmes and the expected gains in property values from the use of TIF exert significant influence in a city's decision to adopt a TIF programme. After using an accurate measure of prior growth, this analysis finds no empirical evidence to support the contention that growing cities are more likely to adopt TIF.

Suggested Citation

  • Joyce Y. Man, 1999. "Fiscal Pressure, Tax Competition and the Adoption of Tax Increment Financing," Urban Studies, Urban Studies Journal Limited, vol. 36(7), pages 1151-1167, June.
    • Handle: RePEc:sae:urbstu:v:36:y:1999:i:7:p:1151-1167
    DOI: 10.1080/0042098993141
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    Cited by:

    1. Robert T. Greenbaum & Jim Landers, 2014. "The Tiff Over TIF: A Review of the Literature Examining the Effectiveness of the Tax Increment Financing," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(3), pages 655-674, September.
    2. Fei, Fan & Hines, James R. & Horwitz, Jill R., 2016. "Are PILOTs property taxes for nonprofits?," Journal of Urban Economics, Elsevier, vol. 94(C), pages 109-123.
    3. Wang, Jia, 2018. "Strategic interaction and economic development incentives policy: Evidence from U.S. States," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 249-259.
    4. Felix, R. Alison & Hines, James R., 2013. "Who offers tax-based business development incentives?," Journal of Urban Economics, Elsevier, vol. 75(C), pages 80-91.
    5. Phuong Nguyen-Hoang, 2014. "Tax Increment Financing and Education Expenditures: The Case of Iowa," Education Finance and Policy, MIT Press, vol. 9(4), pages 515-540, October.

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