Rethinking Growth Strategies: How State and Local Taxes and Services Affect Economic Development

March 19, 2004
   

Rethinking Growth Strategies
How State and Local Taxes and Services Affect Economic Development

Creating jobs and growing the economy are top priorities for state and local officials. Their tools of choice to achieve these goals may, however, be the least effective among those available to them. Too often public officeholders first embrace lowering taxes and creating tax incentives as their chief economic development tools, with public investment usually ranking as a distant third option. An analysis of the relevant research literature, however, finds little grounds to support tax cuts and incentives—especially when they occur at the expense of public investment—as the best means to expand employment and spur growth.

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