Using data from 1990 to 2015, this new database estimates marginal business taxes and business incentives for 47 cities in 33 states for 45 industries for 26 years. The 33 states compose 92 percent of U.S. GDP, and the 45 industries compose 91 percent of U.S. labor compensation.
Created by senior economist Tim Bartik, the "Panel Database on Incentives and Taxes" offers greater depth than other available sources: it describes how business incentives vary over the term of a new business investment (from year 1 to year 20), and it breaks down incentives into different types, including job creation tax credits, property tax abatements, investment tax credits, research and development tax credits, and customized job training.
Therefore, this database allows incentives to be subjected to more in-depth descriptive analyses. Such descriptive analysis can include examination of time trends in different types of incentives, and analysis of how incentives vary with a state’s economic prosperity or with an industry’s wage rates. With more precise knowledge of how incentives vary with states, industries, and time, the database also will permit better estimates of incentive effects.
This report addresses the gap in our data and knowledge by outlining a new database containing better information on state and local business taxes and economic development incentives. It includes an explanation of how the database is constructed, and it subjects the database to some preliminary analyses to begin to answer questions about how incentives vary.
The report begins with a section providing context, including reviews of previous research. The methodology and data sources for this database are then outlined. The bulk of the report then uses the database to describe incentives and how they vary by industry and state, over time, and by type of incentive. The report also considers how different policies alter net taxes after incentives, and describes some simple correlations between taxes, incentives, and state economic characteristics and trends.
The accompanying appendices provide additional details on methodology and data, comparisons with other studies, time patterns of incentives and taxes for each state in the database, and much more.