DO LOCATION-BASED TAX INCENTIVES IMPROVE QUALITY OF LIFE AND QUALITY OF BUSINESS ENVIRONMENT?

• Published in: Journal of regional science Vol. 54; no. 1; pp. 1 - 32
• Main Authors: Reynolds, C. Lockwood, Rohlin, Shawn
• Format: Journal Article
• Language: English
• Published: Amherst, MA Blackwell Publishing Ltd 01.01.2014; Regional Science Research Institute; Blackwell Publishers Inc
• Subjects: Bgi / Prodig; Business; Census; Economic equilibrium; Human geography; Location of industry; Methodology; Political and economic geography; Property; Property values; Public finance; Quality of life; Regional analysis; Studies; Tax credits; Tax incentives; Welfare economics; United States of America; Well-being; Local taxation; Economic environment; Living standard; Firm; Quality of life; Land value
• ISSN: 0022-4146; 1467-9787
• DOI: 10.1111/jors.12035

ABSTRACT We examine how location‐based tax incentives affect quality of life and business environment through changes in property values and equilibrium wages. Using the federal Empowerment Zone program, we determine whether offering tax incentives to firms improves the welfare of the citizens and attractiveness to firms. We demonstrate that quality of life methodologies can be applied using small geographically aggregated data, such as census block groups. We find that the tax incentives offered by the program notably enhances the quality of business environment for firms in the area while modestly improving the quality of life for the individuals living in the area.