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Ranked #6: Tax Exemptions

Area Development's 2006 Corporate Survey respondents are so familiar with the benefits of TAX EXEMPTIONS for both economic development and other purposes that they have ranked this factor high in importance.

Jun/Jul 07
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As an economic developer in city government years ago, I favored tax exemptions over project grants because they were much easier to put through the political process.

Tax increment financing: While certain types of incentives can be regional or state-specific in their use, tax exemptions are virtually ubiquitous across the country. By comparison, tax increment financing (usually a property tax abatement that is funded by tax revenues derived from neighboring properties) is widely used in the Midwest, but it is not that common in the Northeast or the West.

Moreover, project grants and tax increment financing are used less frequently outside the realm of economic development. In contrast, tax exemptions are frequently used for non-economic development policy purposes, most notably environmental, public health, educational, and religious purposes. In fact, the most rapidly growing use of tax exemptions at the state level is in support of the environment. Many states have enacted or expanded tax exemptions related to "renewable energy" equipment and energy efficiency over the last several years.

Tax exemptions are so common in virtually every state - and within and outside of the realm of economic development - that most of the survey respondents are quite familiar with them and may be aware that they benefit greatly from them - hence the high ranking of this factor in Area Development's Annual Corporate Survey.

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