Tax Increment Financing (TIF): A Review of TIF's Economic and Fiscal Effects

Abstract

Local governments use taxes on future increases in property values to pay for current economic development through tax incremental financing (TIF). TIF is a powerful tax tool used to spur improvements to a designated area. Proponents of TIF argue that it allows local governments to make investments without affecting previously established government and school district programs. Detractors argue that because the TIF designation denies existing overlapping districts (e.g., schools) the benefits of increases in property values, TIF can have a negative impact on a community. Empirical evidence on the economic and fiscal effects of TIF is mixed. This paper describes the potential costs and benefits associated with the use of TIF and then summarizes prior research on outcomes associated with this widely used property tax program.

Citation

Hartt, S.A., Nash, J. and Plante, C. (2024), "Tax Increment Financing (TIF): A Review of TIF's Economic and Fiscal Effects", Hasseldine, J. (Ed.) Advances in Taxation (Advances in Taxation, Vol. 31), Emerald Publishing Limited, Leeds, pp. 209-227. https://doi.org/10.1108/S1058-749720240000031007