Does intrajurisdictional tax competition lead local governments to offer larger tax abatements to firms? The authors build upon the traditional literature that models tax abatements as a negotiation between individual governments and firms by including systemic political and economic trends affecting the bargaining power of local governments and businesses. The authors use a longitudinal data set from 1983 to 2004 with detailed information on the 4,408 individual tax abatements negotiated between local governments and firms to examine how tax abatement generosity varies in response to the relative bargaining position of governments and firms. They find that as Ohio has increased the number of local governments able to offer tax abatements, local governments have offered larger abatements to firms.
AndersonJohnWassmerRobert. 1995. The decision to ‘bid for business’: Municipal behavior in granting property tax abatements. Regional Science and Urban Economics25:739–757.
2.
AndersonJohnWassmerRobert. 2000. Bidding for business: The efficacy of local economic development incentives in a metropolitan area. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.
3.
BahlRoy. 1996. Taxation and economic development: A blueprint for tax reform in Ohio. Columbus, OH: Battelle Press.
4.
BartikTim. 1991. Who benefits from state and local economic development?Kalamazoo, MI: Upjohn Institute Press.
5.
BartikTim. 2007. Solving the problems of economic development incentives. In Reining in the competition for capital, ed. MarkusenAnn, 101–137. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.
6.
BinghamRichardMierRobert. 1997. Dilemmas of urban economic development: Issues in theory and practice. Thousand Oaks, CA: Sage.
7.
BlackHarry. 1991. Achieving economic development success: Tools that work. Washington, DC: International City County Management Association.
8.
BursteinMelvin L.RolnickArthur J.1995. Congress should end the economic war among the states. Federal Reserve Bank of Minneapolis: The Region,March, 3–19.
9.
ByrnesPatriciaMarvelMarySridharKala. 1999. An equilibrium model of tax abatements: City and firm characteristics as determinants of abatement generosity. Urban Affairs Review34:805–19.
10.
ClingermayerJames C.FeiockRichard. 1990. The adoption of economic development policies by large cities: A test of economic, interest group, and institutional explanations. Policy Studies Journal18:539–52.
11.
CopelandGary W.MeierKenneth J.1984. Pass the biscuits pappy: Congressional decision-making and federal grants. American Politics Quarterly12:3–21.
12.
DalehiteEsteban G.MikesellJohn L.ZornChris K.2005. Variation in property tax abatement programs among states. Economic Development Quarterly19:157–73.
13.
Dayton Daily News. 2006. State, local giveaways easy course, by lame. September24, A14.
14.
DonahueJohn. 1989. The privatization decision: Public ends, private means. New York: Basic Books.
15.
EisingerPeter. 1988. The rise of the entrepreneurial state: State and local economic development policy in the United States. Madison: University of Wisconsin Press.
16.
FeiockRichard. 2002. A quasi-market framework for development competition. Journal of Urban Affairs24:123–42.
17.
FisherPeter S.PetersAlan H.1998. Industrial incentives: Competition among American states and cities. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research..
18.
GlickmanNorman J.WoodwardDouglas P.1989. The new competition: How foreign investors are changing the U.S. economy. New York: Basic Books.
19.
GoetzEdward G.Terrence KayserT.1993. Competition and cooperation in economic development: A study of the Twin Cities metropolitan area. Economic Development Quarterly7:63–78.
20.
GomezHenry. 2005. Local officials work to keep OfficeMax. Cleveland Plain Dealer, May27, C1.
21.
GordonVictoria. 2007. Partners or competitors? Perceptions of regional economic development cooperation in Illinois. Economic Development Quarterly, 21:60–78.
22.
GramlichEdward. 1997. Subnational fiscal policy. In Perspectives on local public finance and fiscal policy, ed. QuigleyJ. M., 3–27. Greenwich, CT: JAI.
23.
HackerJacob. 2008. The great risk shift: The new economic insecurity and the decline of the American dream. Oxford, UK: Oxford University Press.
24.
Heartland Institute. 1995. 100+ Economists urge: End economic war between the states. News Release, September 20. Palatine, Illinois.
25.
HillEdward. 1994. Tax abatement war within the state. Cleveland, OH: Urban Center, Levin College of Urban Affairs, Cleveland State University.
26.
HoveyHarold A.1986. Interstate tax competition and economic development. In Reforming sate tax systems, ed. GoldS., 89–100. Washington, DC: National Conference of State Legislatures.
27.
KantorPaulSavitchH. V.1993. Can politicians bargain with business? A theoretical and comparative perspective on urban development. Urban Affairs Quarterly29:230–55.
28.
LynchRobert G.1995. Do state and local tax incentives work?Washington, DC: Economic Policy Institute.
29.
LynchRobert G.FishgoldGuntherBlackwoodDona. 1996. The effectiveness of firm-specific state tax incentives in New York. Economic Development Quarterly10:57–68.
30.
MarkusenAnneNesseKate. 2007. Institutional and political determinants of incentive competition. In Reining in the competition for capital, ed. MarkusenA., 1–41. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.
31.
MilyoJeffreyPrimoDavid M.JacobsmeierMathew L.2007. Estimating the impact of state policies and institutions with mixed-level data. State Politics and Policy Quarterly7:446–59.
32.
MoultonBrent R.1990. An illustration of a pitfall in estimating the effects of aggregate variables on micro unit. Review of Economics and Statistics72:334–38.
33.
National Center for Education Statistics. 2005. Census 2000 School District Tabulation (STP2) Data Download, Institute of Education Science, U.S. Department of Education.
34.
Ohio Department of Development. 1997. Ohio enterprise zone, 1996 annual report. Columbus: Economic Development Division.
PerkinsOlivera. 2005. Jackson will create post to oversee regionalism; Suburban mayors are thrilled. Cleveland Plain Dealer, December1, B1.
38.
PetersAlanFisherPeter S.2002. State enterprise zone programs: Have they worked?Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.
39.
PetersAlanFisherPeter S.2004. The failures of economic development incentives. Journal of the American Planning Association70:27–37.
40.
PetersonPaul. 1981. City limits. Chicago: University of Chicago Press.
41.
ReeseLaura A.2006. Not just another determinants piece: Alternative hypotheses to explain local tax abatement policy. Review of Policy Research. March: 491–504.
42.
ReeseLaura A.RosenfeldRaymond A.2004. Local economic development in the U.S. and Canada: Institutionalizing policy approaches. American Review of Public Administration34:277–92.
43.
ReeseLaura A.SandsGary. 2006. The equity impacts of municipal tax incentives: Leveling or tilting the playing field?Review of Policy Research23:71–94.
44.
RubinIreneRubinHerbert. 1987. Economic development incentives: The poor (cities) pay more. Urban Affairs Quarterly23:37–61.
45.
StoneClarence. 1989. Regime politics: Governing Atlanta, 1946–1988. Lawrence: University Press of Kansas.
46.
TalankerAlyssaDavisKateLeRoyGreg. 2003. Straying from good intentions: How states are weakening enterprise zone and tax increment financing programs. Washington, DC: Good Jobs First.
47.
TieboutCharles. 1956. A pure theory of local expenditures. Journal of Political Economy64:416–24.
48.
TurnerRobert C.CassellMark K.2007. When do states pursue targeted economic development policies? The adoption and expansion of state enterprise zone programs. Social Science Quarterly88:86–103.
49.
WeberRachel. 2007. Negotiating the ideal deal: Which local governments have the most bargaining leverage? In Reining in the competition for capital, ed. MarkusenA. R., 141–60. Kalamazoo, MI: W. E. Upjohn Institute for Employment Research.
50.
WolkoffMichael J.1983. The nature of property tax awards. Journal of the American Planning Association49:77–84.
51.
WolkoffMichael J.1992. Is economic development decision making rational?Urban Affairs Quarterly27:340–55.
52.
WolmanHaroldSpitzleyDavid. 1996. The Politics of Local Economic Development. Economic Development Quarterly10:115–150.
