10 PRINCIPLES FOR STATE-TAX INCENTIVES

The use of tax incentives for economic development is growing among st ates. This growth is partially caused by a response to new incentives of neighboring states, and similar incentive laws are passed in the in terest of remaining competitive. As a result, many states have adopted tax incentives not well founded on economic theory or empirical evide nce. This article draws on the latter to develop ten principles that s tates can employ to enhance the fairness and effectiveness of tax ince ntives. To illustrate their application, the principles are used to ev aluate the state of Georgia's incentive programs.