Property Tax Abatements
Property tax abatements have long been a popular incentive program for communities hoping to attract new businesses to locate in their area. Tax abatements simply relieve a new business from needing to pay a certain percentage of their local property taxes for a set number of years.
However, the value of such a program to a community is questionable. The community gives up important tax revenue--money which it may desperately need to improve local facilities--to a company that, although happy to accept the dividend of tax relief, may consider this as a minor part of their decision on where to locate. It has been shown that businesses made a location decision primarily on market characteristics and potential profitability--it is typically a decision based on location, not on taxes. The best way to attract business is by providing the best potential market for their goods. Tax abatements have little effect on attracting new businesses, and are often seen as unfair by existing businesses who are unfairly burdened through a system which puts a disproportional tax burden on them.
