Policy Documents

Crony Capitalism and Social Engineering: The Case Against Tax-Increment Financing

Randal O'Toole –
May 18, 2011

In this Policy Anaysis, Randall O'Toole takes on subsidies that don't work, and are not efficient.  What do a car dealership in Belleville, Ill.; a Walmart in Bridgeton, Mo.; housing for the homeless in San Diego, Calif.; a delicatessen in Ann Arbor, Mich.; and streetcar lines in St. Louis, Mo., Ft. Worth, Texas, and Portland, Ore. have in common? All were subsidized by an urban renewal trick known as tax-increment financing (TIF). Due to TIF, urban renewal is one of the fastest-growing parts of local government.  Using TIF, urban renewal agencies effectively steal more than $10 billion a year that voters thought they had allocated to schools, fire, police, and other urban services. Yet, the work these agencies do has little value and may hinder economic growth.