Edward A. Zelinsky (Cardozo) has published Tax Incentives for Economic Development: Personal (and Pessimistic) Reflections, 58 Case W. Res. L. Rev. 1145 (2008). Here is the Introduction:
The topic of this essay—state and local tax incentives for economic development—is a deeply personal subject for me. For almost twenty years, I served on the Board of Aldermen of New Haven, Connecticut, and then on that community's Board of Finance. For all of those years, the city's finances were a central concern in my life.
During these two decades, I shepherded through the legislative process many municipal property tax abatements awarded to developers in return for their promises to invest in the community. I now suffer from buyers' remorse as to these deals.
In another incarnation, I have found myself in the middle of vigorous academic debate with those who assert that the dormant Commerce Clause rule of nondiscrimination prohibits state and local tax incentives designed to attract and retain investment. In that debate, I have argued that there is no constitutional barrier to such tax incentives. In particular, I have argued that it is doctrinally incoherent to view dormant Commerce Clause nondiscrimination as outlawing tax incentives while permitting economically and procedurally equivalent direct expenditures. I have also argued that the concept of dormant Commerce Clause nondiscrimination fails to explain which tax reductions are constitutionally prohibited and which are constitutionally permitted.
My support for municipal tax abatements during my years as a city official, combined with my more recent writings about the constitutional permissibility of state and local tax incentives, might lead some to infer that I am today a supporter of such incentives to lure investment. The reality is more complex: As a matter of policy, I am now intensely skeptical of state and local tax incentive packages designed to stimulate economic development. Unfortunately, I am equally skeptical that there is a good way to police such incentives.
