Wichita city leaders are proud to announce the end of cash incentives, but they were only a small portion of the total cost of incentives.
Wichita city leaders say that cash incentives are on the way out. That’s a welcome change. Cash incentives, however, were only a small part of the city’s spending on incentives. Far more costly are property and sales tax abatements, tax increment financing, and various programs at the state level. There seems to be no appetite to reduce reliance on these.
Forgiveness of taxes is more valuable to business firms than receiving cash. That’s because cash incentives are usually taxable as income, while forgiveness of taxes does not create taxable income. Each dollar of tax that is forgiven adds one dollar to after-tax profits. 1
Wichita city leaders will take credit for reforming the use of incentives, but cash incentives were only a small portion of the total cost of incentives. It’s up to citizens to be watchful of the total cost of incentives, as the city does not make this data available.
- Site Selection magazine, September 2009. 2015. ‘INCENTIVES — Site Selection Magazine, September 2009’. Siteselection.Com. Accessed May 1 2015. http://www.siteselection.com/issues/2009/sep/Incentives/ ↩