The case against TIF


Author: Timothy Sandefur

Tax Increment Financing, or TIF, is the trick that bureaucrats use to finance massive redevelopment projects that include condemning small businesses and homes and giving the land to politically well-connected private developers. Randall O'Toole, an expert on urban planning and transportation policy, has a critical new paper that gives The Case Against TIF. Excerpt:

[R]ather than promoting economic development, many if not most TIF subsidies are used for entirely different purposes. First, many states give cities enormous discretion for how they use TIF funds, turning TIF into a way for cities to capture taxes that would otherwise go to rival tax entities such as school or library districts. Second, no matter how well-intentioned, city officials will always be tempted to use TIF as a vehicle for crony capitalism, providing subsidies to developers who in turn provide campaign funds to politicians. Finally, many cities use TIF to persuade developers to build "new-urban" (high-density, mixed-use) developments that are supposedly greener than traditional designs but are less marketable than low-density suburbs. Albuquerque, Denver, Portland, and other cities have each spent hundreds of millions of dollars supporting such developments when developers would have been happy to build low-density developments without any subsidies.

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