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100 _aCheng, Shaoming
_954210
245 _aIncentivized for Leveling the Playing Field:
_bDo State Economic Incentives Compensate for High Taxes?/
_cShaoming Cheng
260 _bSage,
_c2020.
300 _aVol.34, issue 2, 2020: (101–115p.)
520 _aState tax and nontax incentives have been widespread in the United States, though their efficacy in job creation and economic development has been repeatedly questioned in the literature by scholars and policy makers. Why, then, do states persistently pursue these incentive policies? Using the newly developed Panel Database on Incentives and Taxes, we adopt a dynamic spatial Durbin panel model to account for both temporal and spatial dependence and to shed light on this question. Empirical evidence suggests a statistically significant and positive relationship between tax credits and tax burdens (i.e., elevated tax breaks are used to offset higher tax differentials). States therefore may seek to create a level playing field in business attraction and retention by overcoming tax disadvantages. Besides, high-serial dependence is present in the use of various tax credits, suggesting a high self-perpetuating tendency that tax breaks, once introduced, are likely to be persistent over time. States are also found to be engaged both in spatial competition or imitation among geographically proximate states, and in strategic benchmarking among states that are geographically distant but economically alike.
650 _aEconomic Incentives Compensate
_954211
650 _aIncentivized
_954212
650 _aCompensate for High Taxes
_954213
700 _aGuo, Hai (David)
_eCo-author
_954214
700 _a Liu, Cathy Yang
_eCo-author
_954215
773 0 _010589
_916747
_dSage Publisher
_tEconomic development quarterly
856 _uhttps://doi.org/10.1177/0891242420917219
942 _2ddc
_cART
999 _c13431
_d13431