Why Tax Incentives Matter
States spend billions of dollars a year on tax credits, deductions and exemptions meant to encourage businesses to create or retain jobs and make investments. When designed and managed well, tax incentives can strengthen a state’s economy. But Pew’s research reveals that lawmakers often approve or continue incentives without knowing their potential cost or whether they are working. State leaders need better information to avoid unexpected budget challenges, identify effective incentives, and reform or end programs that are not meeting expectations.
How We Conduct Our Work
We study the policies and practices states have used to generate much-needed answers about the budget risks and economic returns of tax incentives. Based on this research, we work with leaders in selected states to advance policies that:
- Protect budgets from unexpected tax incentive costs;
- Evaluate all tax incentives on a regular schedule; and
- Inform lawmakers’ policy choices with evidence from evaluations