Distribution of Development Costs Under Tax Increment Financing

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Abstract
The increased use of tax increment financing requires financial and economic development planners to understand the fiscal interrelatedness of cities and other local governments within a metropolitan area and of their taxpayers. In this article I conduct a flow-of-funds analysis on the TIF projects undertaken by nine municipalities in Milwaukee County, Wisconsin. It shows that taxpayers in some communities may pay more in tax increments for the use of TIF throughout the county than they would have paid financing their own development projects solely through local taxes. Clear identification of taxpayer costs under TIF should improve local development decisions.

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