Is Local Tax Abatement Worth it?

A Ball State University economist says employment-based tax credits are more effective than tax abatement in attracting jobs to Indiana. Center for Business and Economic Research Director Mike Hicks says between 2005 and 2010, state EDGE credits created one manufacturing job per $1,000, while local abatements resulted in one manufacturing job per $30,000 in tax dollars lost. Hicks expands on the research in an interview to air this weekend on Inside INdiana Business Television. Hicks believes counties could benefit by using some of the tax revenue that may otherwise be lost through abatement to “make communities livable.” He says quality of life is “increasingly important” to attracting jobs.

The report shows, on average, Indiana counties provided about $1.4 million in tax incentives to businesses between 2005-2010. The research shows the benefits involved an average of 1.2 projects per county. Local tax abatements were larger, with an average of $1.6 million, and a maximum of $179 million of abated property in one county.

You can read the full report by clicking here.

Source: Ball State University