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Everything About Tax Increment Financing

A controversial form of value capture, tax increment financing begs for further analysis and understanding. A new report by the Lincoln Institute of Land Policy sheds light on the subject.
September 16, 2018, 5am PDT | James Brasuell | @CasualBrasuell
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Payton Chung

Tanvi Misra shares news of a new study by David Merriman, professor at the University of Illinois at Chicago, for the Lincoln Institute of Land Policy that digs into the causes and effects of Tax Increment Financing.

The report, titled "Improving Tax Increment Financing (TIF) for Economic Development," examines available research on the implementation and impacts of TIF before coming to the conclusion "that the mechanism, while helpful in some ways, leaves a lot to be desired," according to Misra.

Misra explains how TIF works, and illuminates some of the common criticisms about TIF in the real world. For instance:

Critics often charge that it funnels money out of the taxpayers’ pockets into a special fund that, by and large, works in a pretty opaque manner. While some of that money funds essential public works, much has also gone towards erecting new Whole Foods, renovating glitzy hotels, and building stadiums—the type of projects, one might argue, should not require such incentives. And the evidence Merriman analyzes suggest [sic] they may have a point. He shows that, in most cases around the country, the tool did not fulfill its main goal of boosting economic development.

The article also includes resources for understanding the controversy surrounding TIF in Chicago, where TIF stays in the news almost constantly.

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Published on Wednesday, September 12, 2018 in CityLab
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