The Sales Tax, Special Elections, and Voter Turnout

By Dr. Jeremy Horpedahl   Arkansas has the third highest combined state and local tax rate in the nation. How did this happen? Research we are conducting at the Arkansas Center for Research in Economics suggests that part of the reason is that many counties and cities have elected to increase their own sales tax rates. […]

Issue 3 and Local Economic Development

By Mr. Jacob Bundrick Will Issue 3 bring jobs or bankruptcy taxes? Issue 3 proposes to allow local governments to appropriate tax dollars directly to private companies for economic development projects and to pay private organizations for economic development consulting work. Issue 3 would also expand the type of projects for which local debt can […]

Issue 3: Unleashing Economic Development Bonds

By Dr. Jeremy Horpedahl and Mr. Jacob Bundrick   Issue 3 is a complicated ballot measure. The bill runs 9 pages of legal text and it amends at least six sections of the Arkansas Constitution. No wonder voters are confused! In this blog post, we will discuss the benefits and costs of Issue 3’s major […]

Why Tax Incentives for Sports Venues and Film Production Fail

By Mr. Jacob Bundrick Recently, I’ve written about how financial incentives that states provide to businesses in the form of tax breaks and subsidies don’t increase economic activity, have fiscal costs, are ineffective in steering the economy, and lack taxpayer protections when the firms that get money don’t meet their promises. In my final post […]

Why Financial Incentives for Businesses Put Taxpayers at Risk

By Mr. Jacob Bundrick Supporters of financial incentives for businesses argue that incentives are designed to protect the taxpayers who pay for them. Tax incentives generally pay out only after a company makes a business investment. An example is the tax credit for 1 percent of payroll that Elyxor will receive for creating 45 jobs […]

How Governments Use Financial Incentives to Try to Steer the Economy

By Mr. Jacob Bundrick Earlier this month, software engineering firm Elyxor pledged to create 45 new tech jobs in North Little Rock over the next five years. Arkansas Online quoted Governor Asa Hutchinson as saying, “While we have a diversified economy in Arkansas … we will not be complete as a state and complete as […]

How Tax Breaks and Subsidies Cost You and the Government Money

By Mr. Jacob Bundrick Proponents of financial incentives for business argue that tax breaks and subsidies don’t create costs to the state’s budget. Advocates reason that if Arkansas forgoes taxing a firm in some way, and that firm truly would not have located in the state without the tax break, there is no cost to […]

Why Financial Incentives Do Not Increase Economic Activity

By Mr. Jacob Bundrick In my last post, I went over the basics of why tax incentives and subsidies are considered staples of economic development. In this post, I’ll explain why they don’t work as politicians might hope. A common argument in favor of financial incentives is that tax breaks and subsidies motivate firms to […]

Tax Incentives and Subsidies: Two Staples Of Economic Development

By Mr. Jacob Bundrick If you’ve ever wondered why corporate welfare gets such a bad rap, you’ll want to read this post and the five follow-up posts I’ll be publishing over the next few weeks. My goal is to help you understand why governments give tax breaks and subsidies to local businesses and why, even […]

State Incentives in Arkansas: A Friendly Debate in the Arkansas Democrat-Gazette

ACRE’s analysts and economists have recently engaged in a friendly debate on an important topic: whether Arkansas’ business tax incentives and subsidies are necessary. The debate took place over the past few weeks on the op-ed pages of the Arkansas Democrat-Gazette, the state’s largest circulation newspaper. Jacob Bundrick, ACRE policy analyst and UCA alum, started […]