A Typology of Place-Based Investment Tax Incentives

Abstract

This Article develops a typology of place-based investment tax incentives that can be used to evaluate the relevance of empirical findings, identify new areas of research, and predict the impact of specific tax incentive designs. This typology will be especially valuable for the purpose of analyzing the new federal Opportunity Zones investment tax incentives.

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. 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. Third, this Article identifies areas for further legal and empirical research.

As this Article explains, 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.

Keywords: Taxation, Poverty, Community Development

JEL Classification: K34