The Determinants of Tax-Based Incentives: An Empirical Analysis of State Governments

Hakyeon Lee, J. S. Butler

Research output: Contribution to journalArticlepeer-review

1 Scopus citations


To determine why state governments often use tax-based incentives, this study focuses on five major tax-based incentives: job creation tax credits, investment tax credits, R&D credits, property tax abatements, and customized job training subsidies. The statistical results indicate that a state government’s prevailing political ideology influences the choice of economic development activities. Accordingly, a more liberal state is less likely to use property tax abatements and customized job-training subsidies, and more likely to use job creation tax credits and R&D tax credits. Further, competition does not operate to trigger tax-based incentives. State economic conditions are not significantly related to the use of incentives. This result could imply the prevalence of political factors in the use of incentives.

Original languageEnglish
Pages (from-to)1431-1460
Number of pages30
JournalPublic Performance and Management Review
Issue number6
StatePublished - 2022

Bibliographical note

Publisher Copyright:
© 2022 Taylor & Francis Group, LLC.


  • Determinants
  • economic development policies
  • political ideology
  • state governments
  • tax-based incentives

ASJC Scopus subject areas

  • Public Administration
  • Strategy and Management


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