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Article
Is tax competition strategic? Spatial distributions of business property tax abatements in the Chicago suburbs.
Economic Development Quarterly
(2021)
Abstract
We analyze the locations of property tax abatements awarded to businesses in Cook County, Illinois from 2012 to 2014 to explore their spatial distribution and to examine local government motivations for awarding incentives. Our analysis, which controls for the spatial distribution of businesses, reveals clustering of abatements at intra-municipal geographic scales. We also find amplified probabilities that abatements are awarded to businesses located near tax increment financing districts or enterprise zones. These patterns suggest that local governments use abatements in a strategic fashion to advance policy goals. We use the same data to develop three indices of the degree of abatement clustering at the municipal scale for each of the 64 municipalities in Cook County that awarded five or more abatements. Most of the Chicago suburbs exhibit a pattern consistent with the strategic award of business tax incentives.
Keywords
- business incentives,
- property tax,
- abatements,
- clustering,
- local government competition,
- tax increment financing,
- enterprise zone
Disciplines
Publication Date
February 1, 2021
DOI
10.1177/0891242420977694
Citation Information
Richard G Funderburg, Joshua Drucker, David Merriman and Rachel Weber. "Is tax competition strategic? Spatial distributions of business property tax abatements in the Chicago suburbs." Economic Development Quarterly Vol. 35 Iss. 1 (2021) p. 66 - 83 Available at: http://works.bepress.com/jdrucker/45/