Jensen, Nathan M.
[Verfasser:in]
;
Malesky, Edmund J.
[Sonstige Person, Familie und Körperschaft];
Medina, Mariana
[Sonstige Person, Familie und Körperschaft];
Ozdemir, Ugur
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 31, 2010 erstellt
Beschreibung:
Both countries and subnational governments commonly engage in competition for mobile capital, offering generous location incentives to attract investment. The use of tax incentives is a paradox, whereby fiscally strained governments offer lucrative tax treatment to firms, yet the economics research has consistently shown tax incentives have little impact on the investment decisions of businesses. In this paper we construct a formal model of firm specific tax incentives that focuses on how politicians take credit or minimize blame for firms' investment decisions. We test the empirical implications of this model using an internet survey, which employs a randomized experiment to test how voters evaluate the performance of incumbent U.S. governors. Our findings illustrate the key political benefit of offering tax incentives for politicians. Politicians can use these incentives to take credit for investment flowing into their districts