A Typology of Place-Based Investment Tax Incentives

Authors

Michelle D. Layser, University of Illinois College of LawFollow

Abstract

This Article makes several contributions to tax, poverty, and empirical legal literature. First, it defines the category of place-based investment tax incentives and identifies key elements of variation across the category. Despite their prevalence at all levels of government, place-based investment tax incentives remain undertheorized and largely undefined in the literature. The typology presented here reflects an analysis of three federal tax incentives (the New Markets Tax Credit, the Low-Income Housing Tax Credit, and the new Opportunity Zones law) and a detailed survey of tax incentives included in state enterprise zone laws. By defining this category of tax laws and identifying the basic types of place-based investment tax incentives that exist—or may not yet exist—under current law, this Article helps situate the conversation about these tax laws within broader tax policy debates.

Second, the typology presented here can be used by both tax and poverty law researchers to help assess the applicability of existing empirical studies to specific types of place-based investment tax incentives. Social scientists have published dozens of impact studies focusing on a wide variety of place-based investment tax incentives. Those studies, which have focused on both state and federal tax laws and their impact throughout the country, have sometimes reached contradictory conclusions. The ability of legal researchers to advance the debate over place-based investment tax incentives—and to predict the impact of new laws like Opportunity Zones—depends upon making sense of these studies.

Third, this Article identifies areas for further legal and empirical research. As will be explained, community-oriented types of place-based investment tax incentives, which contain features specifically designed to benefit residents of poor communities, are uncommon under existing law. These rare types of tax incentives are theoretically promising and enjoy some empirical support; nevertheless, due in part to their rarity, they have been largely understudied. The most complete understanding of place-based investment tax incentives, therefore, will require additional research about the ideal design and impact of community-oriented investment tax incentives.

Recommended Citation

Michelle D. Layser, A Typology of Place-Based Investment Tax Incentives, 25 Wash. & Lee J. Civ. Rts. & Soc. Just. 403 (2019).
Available at: https://scholarlycommons.law.wlu.edu/crsj/vol25/iss2/4