Local Government and Tax Incentives

Local Government and Tax Incentives

Like federal and state governments, local governments offer tax incentives to businesses to help solve economic and/or environmental problems. Conduct an Internet search and find an example of a state or local government (perhaps your own) that offers an incentive to businesses and cite your resource(s). Describe the tax incentive you found, determine what economic problem(s) government is trying to solve by offering the incentive you highlight, and do your best to evaluate the costs and benefits of the incentive.

For business owners currently living in Philadelphia, PA, or those who hope to relocate their operations to the city, a wide selection of generous tax incentives have been provided on the federal, state, and municipal levels that are designed to incentivize this choice. According to the City of Philadelphia's Business Services division, there are more than a dozen tax incentives currently in place to alleviate operational costs for local business owners (2009), while positioning Philadelphia as a preferable location for businesses seeking to launch, expand, or relocate. Like all municipalities attempting to correct a deficiency, flaw, or problem within their local economy, Philadelphia has turned to tax incentives for businesses in an effort to reverse the effects of a prolonged national recession, while reviving the city's economy by stimulating the growth of local businesses. Among the tax incentives listed on the City of Philadelphia's Business Services webpage are the Green Roof Tax Credit, through which "credits of 25% of all costs incurred to construct the Green Roof, to a maximum of $100,000, can be applied against Philadelphia's Business Income and Receipts Tax liability" (2009), and the Philadelphia Job Creation Tax Credit, which "offers eligible business owners a one-time tax credit of up to $5,000 for each new qualified full-time job created in the city" (2009). With the Mayor of Philadelphia, Michael Nutter, facing fierce criticism by City Council and union members over his proposed revisions to the city's property tax code (Mayes, 2013), the tax incentives currently in place were implemented to attract business owners from other states to relocate to Philadelphia, thereny neutralizing any expected losses in revenue due to reductions in the property tax rate.

2.) Property Taxes

Property taxes are invaluable to local governments and provide a good portion of their overall revenues. As such, it is valuable to learn more about them as they are often misunderstood. First, research property tax in your state: Who assesses property? What valuation standard is used? In what cycles are properties assessed? What classification system is used? What methods of property-tax relief are used for those in need? Then discuss why property tax is often the most-disliked tax. What are some reasons people seem to dislike it more than other taxes?