According to a 2019 report from the Utah Foundation, state and local tax incentives are often seen as controversial. Critics view them as public subsidies that distort true economic growth and cause local governments to (at least for a time) forgo tax revenue. Proponents see certain tax credits as a necessary tool to spur development when the private sector can’t.
The nonpartisan, nonprofit public policy research firm says post-performance tax incentives carry less risk for the governments doling them out.
“Structuring incentives in a post-performance fashion allows local governments to ensure that they get the promised benefit before paying out any financial incentive,” the Utah Foundation report says. “It also limits the liability of local governments, because if an awardee fails to meet its thresholds, the local government does not have to provide the financial incentive.”
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