Pew Center: Mississippi among states that need better policy for evaluating tax incentives

Last week, the Pew Center on the States released "Evidence Counts," a study evaluating state tax incentives for jobs and growth.  In an introductory letter for the study, Susan Urahn, Managing Director for the Center says that while every state is looking for ways to attract business, "half the states have not taken basic steps to produce and connect policy makers with good evidence of whether these tools deliver a strong return on taxpayer dollars."

The study focuses on whether states do their homeowork prior to passing laws and to what degree states measure economic impact on the front end.  This is important because as the researchers argue, "Tax incentives cost billions of dollars every year, and states rely heavily on them to promote economic development.  Policy makers should know whether these tools deliver a strong return on investment.  Regular, rigorous, and comprehensive evaluations of tax incentives are critical to their ability to do so."

Sadly, as the following diagram shows, the Pew Center has included Mississippi among those states not meeting any of the criteria for scope or quality of evaluation.

This study is interesting not only because it provides a gauge for how states are investing taxpayer dollars in the name of economic development, it also provides examples of successful incentive programs and some suggestions for legislatures looking to improve their evaluation process.