------- Forwarded Message Follows -------
From: "Steven C. Deller" <deller@AAE.WISC.EDU>
To: cenet@agvax2.ag.ohio-state.edu
Date: Mon, 25 Nov 1996 15:59:36 -0500
Subject: Tax Abatements
Reply-to: deller@aae.wisc.edu
Priority: normal
It seems as though tax abatements do offer one tool at the
development practitioners. However, the problem that Ohio faces is
that tax abatements has been putforth as THE tool, and as such we run
into fundementally more difficult problems.
We also have a problem of comparative advantage in terms of offering
tax abatements as an option. For many smaller and more rural
communities tax abatements are often an unreasonable alternative.
One, the scale of the abatement is too small to really matter. Two,
in smaller communities businesses not receiving the "bribe" complain,
often very loadly. Three, given limited resources of smaller
communities, can these resources be better used elsewhere? I would
suggest yes. Four, tax abatements often put smaller communities into
the position of "shoot anything that flies, claim anything that
lands."
My own conclusion is that tax abatements MAY work for state level
development efforts or larger cities who can afford the abatement and
the scale of the abatement is sufficient to really make a difference.
Firms that are looking to relocate often ask if the community is
"willing to play the game?" (i.e., tax abatements) But once the
community says, perhaps, the firm moves forward with the community
even if the abatement is never used. Hence, the option of the
abatement needs to be in place in order to "be in the game" but that
does not mean that it must be used in all cases.
**********************************************************************
* Steven C. Deller 608-263-6251 *
* Associate Professor and 608-262-4376 (fax) *
* Community Development Economist deller@aae.wisc.edu *
* Department of Agricultural and Applied Economics *
* Taylor Hall -- 427 Lorch St. *
* University of Wisconsin-Madison GO BADGERS!!! *
* Madison, WI 53706 *
**********************************************************************
Associate Professor
Dept. of Ag. Economics & Rural Soc.
University of Idaho
Moscow, ID 83843
http://www.uidaho.edu/~scooke/onepercent
208-885-7170 (phone)
208-885-5759 (fax)