Georgia "Trailing Behind" on Evaluating Tax Incentives

Pew Center for the States

April 27, 2012

The information provided here is for informational and educational purposes and does not necessarily reflect the opinion and/or policy position of the Georgia Municipal Association.

Georgia grouped among 26 states that fail to measure whether business tax credits, exemptions, and deductions deliver what is promised.

 
A new report from the Pew Center on the States grouped Georgia as "trailing behind" in regards to evaluating the effectiveness of business tax credits, exemptions, and deductions.
 
The report concludes that 13 states are leading the way, 12 states have mixed results, and 25 states plus Washington D.C. are trailing behind. 
 
The Pew research looked at both the scope and quality of a state's evaluation efforts:
  • Scope
    Pew asked whether the state 1) assesses all its major incentives for economic development, and 2) seeks to ensure that the results inform policy makers’ deliberations.
  • Quality
    Pew looked at whether each evaluation 1) thoroughly examines the tax incentive’s impact on the state’s economy, and 2) draws clear conclusions about whether it is achieving the state’s goals and how it might be improved.
The report does not address whether business tax incentives are good or bad.  Also, the report makes clear that a state's lack of evaluations isn't an indication that the incentives are ineffective, or that a robust evaluation process ensures that the incentives are effective.
 
The Pew report concerns itself solely on the effectiveness of the state's evaluations by focusing on whether they:
  • Inform policy choices
  • Include all major tax incentives
  • Measure economic impact
  • Draw clear conclusions
More information can be found in the Pew Center on the State's report, Evidence Counts: Evaluating State Tax Incentives for Jobs and Growth (PDF, 1.14MB).
 
For a Georgia perspective on the results of the study, visit Wesley Tharpe's post, Getting Georgians’ Money Worth on Tax Expenditures, on the Georgia Budget & Policy Institute blog.

 
The Pew Center on the States provides nonpartisan reporting and research, advocacy, and technical assistance to help states deliver better results and achieve long-term fiscal health by investing in programs that provide the strongest returns.