Most States Not Evaluating Effectiveness of Tax Incentives, Report Finds

Amid the great debate over which metrics matter, most practitioners agree that consistently measuring and evaluating the effectiveness of economic development programs is critical for success and sustainability. A new report by the Pew Center on the States found that half of the states with tax incentive programs do not take the basic steps needed to know whether or not they are effective. The study identified 13 states with good assessments, 12 with mixed results, and 26 not meeting any criteria for scope or quality of evaluation.

A major problem seems to be that states conducting rigorous evaluations of some incentives tend to ignore others and many states evaluate infrequently or not thoroughly enough. The authors focused the study on four criteria for effective evaluation and assessed the states' practices as to how well they: inform policy choices, include all major tax incentives, measure economic impact, and draw clear conclusions. Leading examples are found in Connecticut, Louisiana, Oregon, and Washington. Evidence Counts: Evaluating State Tax Incentives for Jobs and Growth is available at: http://www.pewcenteronthestates.org/uploadedFiles/015_12_RI%20Tax%20Ince....