Is Tax Increment Financing Racist? The Racially Disparate Impact in Chicago's TIF Spending
50 Pages Posted: 23 May 2015 Last revised: 29 Apr 2016
Date Written: May 22, 2015
Tax-Increment Financing (TIF) is a financing tool used by cities large and small across the country. Chicago, whose history includes several instances of de jure and de facto racial discrimination, is an especially prolific TIF user. This Note examines TIF distribution in each of Chicago’s 50 wards. Both a regression analysis and full population data show that White wards receive substantially greater TIF allocations than Black and Hispanic wards. To solve this disparity, this Note proposes amending the Illinois TIF statute to narrow the circumstances in which TIF is available. This Note further proposes changing Chicago’s TIF allocation process to restrict TIF dollars to wards experiencing extreme poverty and wards with little racial disparity, concluding that the latter is the best and fastest short-term option to correct the imbalance.
Keywords: TIF, Tax Increment Financing, Chicago, race, racial disparity, racially disparate
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