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Taxes and Spending and Incentives

Academic Journal Publications:

by ACRE Policy Analyst Jacob Bundrick

From 2002 through 2012, compared with its surrounding states Arkansas saw less growth in the real dollar value of manufacturing, a greater decline in manufacturing鈥檚 share of gross domestic product, and a faster rate of job loss in manufacturing. One reason for these outcomes is manufacturing鈥檚 slow growth in labor productivity, which is defined as growth in the dollar value of output per manufacturing employee, adjusted for inflation. This study examines the relationship between state and local taxes and labor productivity in manufacturing. It is found that total state and local tax burdens reduce output per manufacturing employee, primarily through sales and corporate income taxes. Legislators across all states should consider the distortionary effects of taxes when making tax-policy decisions because those decisions will influence not only manufacturing productivity, but also the rate of economic growth.

by Dr. David T. Mitchell and Dean Stansel

During the most recent recession, many state governments faced substantial budget shortfalls. Those shortfalls are often blamed on external factors like the declining economy or reductions in federal aid. What politicians themselves do, especially during expansionary years鈥攚hether they enact spending increases, implement tax cuts, increase the size of their rainy day funds, or some combination thereof鈥攊s typically given less attention. We examine those factors and find that fiscal stress tends to be positively associated with spending growth, negatively associated with the size of rainy day funds, and not statistically significantly associated with the unemployment rate or federal aid.

ACRE Working Papers:

by ACRE Scholar Dr. Thomas Snyder and ACRE Policy Analyst Jacob Bundrick.

The study investigates the relationship between providing cash subsidies to select businesses, on the one hand, and, on the other hand, employment and establishments in Arkansas鈥檚 counties. The author鈥檚 find no evidence to suggest that Quick Action Closing Fund subsidies lead to increased employment and business establishments in Arkansas鈥檚 counties. The working paper was published by the Mercatus Center at George Mason University and has been accepted for publication in The Review of Regional Studies.听You can read a one-page infographic of Bundrick’s research here.

There’s Nothing Natural about the State of Government Spending in Arkansas by ACRE Scholar Dr. Jeremy Horpedahl and ACRE Policy Analyst Jacob Bundrick.

Despite being one of the poorest states in the nation, Arkansas has a high state government spending level, even in comparison to similar states. Arkansas has higher state spending per capita than its bordering states and other regional 鈥渃ompetitor states,鈥� specifically Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia. When federal transfers are subtracted from state government spending, Arkansas still has far higher spending than its competitor states. In 鈥淭here鈥檚 Nothing Natural about the State of Government Spending in Arkansas,鈥� Dr. Jeremy Horpedahl and Mr. Jacob Bundrick undertake a comprehensive analysis of how Arkansas got to where it is today as well as the reforms necessary to put Arkansas on a more sustainable path. Arkansas鈥檚 spending trends are very similar to those of other states, but the magnitude of Arkansas鈥檚 spending and the institutional environment that has shaped it are unique. Given Arkansas鈥檚 history of state spending growth, it would be wise to consider some limits to future increases in spending. You can read a one-page infographic of their work here.

Policy Reviews:

Tax Breaks & Subsides: Challenging the Arkansas Status Quo by ACRE Policy Analyst Jacob Bundrick

Have you ever wondered whether tax breaks and subsidies have side effects? Are you curious about alternative ways to grow Arkansas’s economy? This policy review give an in-depth look at these programs, their economic impact, and some common misconceptions people have about them.

Policy Briefs:

Economic Development or Risky Business: A Citizen鈥檚 Guide to Issue 3, 2016听by听ACRE Scholar Dr. Jeremy Horpedahl and ACRE Policy Analyst Jacob Bundrick

This brief guide gives readers the pros and cons of the controversial ballot measure Issue 3:听An Amendment to the Arkansas Constitution Concerning Job Creation, Job Expansion and Economic Development. This ballot issue would remove the current cap on Amendment 82 bonds the state may issue for economic development projects and allow local governments to appropriate money for economic development.听Proponents of Issue 3 argue that by removing the limit on the amount of debt the state can issue for听economic development, Arkansas may be able to attract economic-development projects it would not听otherwise be able to secure.听However, issuing debt and using tax dollars for economic development comes at a cost. Arkansas and its cities would take on significant risk by issuing public debt to attract select companies under the change from Issue 3.

Radio:

  • On December 22, ACRE Scholar Dr. Thomas Snyder and ACRE Policy Analyst Jacob Bundrick were guests on听听talking with Dan Harpool about occupational licensing (including the new听听report), Bundrick鈥檚 study of the Quick Action Closing Fund, and all the latest in tax reform news (for both Arkansas and the nation).
  • ACRE Scholar Dr. Thomas Snyder and ACRE Policy Analyst Jacob Bundrick were guests on the Paul Harrell Program on December 12, 2017听 discussing听their recent working paper entitled 鈥溾�� on the Paul Harrell Program. You can stream the
  • ACRE Scholar Dr. Jeremy Horpedahl was a guest speaker on NPR’s Marketplace discussing SALT deductions on October 27, 2017. If you weren’t one of the 12 million tuning in, you can stream the full segment !
  • ACRE Policy Analyst Jacob Bundrick was a guest on the Paul Harrell show on September 27, 2017 talking about his new paper on Arkansas state taxes and manufacturing productivity. You can stream the听
  • ACRE听Scholar Dr. Jeremy Horpedahl听and Policy Analyst Jacob Bundrick were guests on the听Paul Harrell Program听on听August 16, 2017.听They discussed their new Mercatus working paper,听“There’s Nothing Natural about the State of Government Spending in Arkansas.”
  • ACRE听Scholar Dr. Jeremy Horpedahl听and Policy Analyst Jacob Bundrick spoke in an hour-long segment on the听听on听August 10, 2017.听They discussed state spending and their new Mercatus paper,听“There’s Nothing Natural about the State of Government Spending in Arkansas.”
  • ACRE Director Dr. David Mitchell and Policy Analyst Jacob Bundrick spoke in a 2 hour segment on the听听discussing Arkansas taxation, subsidies, and other state issues on July 13, 2017.
  • Policy analyst Jacob Bundrick was a guest on听Josh Waters 101.3 FM on July 6, 2017 to discuss policy issues in the state.
  • ACRE Director Dr. David Mitchell, Scholar Dr. Jeremy Horpedahl, and Policy Analyst Jacob Bundrick were guests on听听on May 1, 2017 where they discussed Arkansas tax reform and other state issues.
  • ACRE Director Dr. David Mitchell and ACRE Scholar Jeremy Horpedahl were guests on the听Paul Harrell Program听on January 4, 2017. They discussed the complexity of Arkansas鈥檚 tax system and possibilities for tax reform.
  • On December 28, 2016, ACRE policy analyst Jacob Bundrick and ACRE Scholar Jeremy Horpedahl were on听听discussing tax reform in Arkansas.

Op-eds/Commentary:

  • Arkansas Business Status and Future Under The Trump Era Economy听transcript of panel discussion featuring ACRE Scholar and BT天堂Assistant Professor of Economics Jeremy Horpedahl at the 66th Annual Conference of Arkansas College Teachers of Economics and Business. Panel moderator was ACRE Scholar and BT天堂Associate Professor of Economics Dr. Tom Snyder.
  • op-ed published January 20,听2018 by ACRE Policy Analyst Jacob Bundrick in the听Arkansas Democrat-Gazette.
  • 听op-ed published October 29,听2017 by ACRE Scholar Dr. Jeremy Horpedahl in the听Log Cabin Democrat.
  • 听op-ed published October 27,听2017 by ACRE policy analyst Jacob Bundrick in the听Arkansas Democrat-Gazette.
  • Economic Development Bidding: A Prisoner鈥檚 Dilemma insight article published October 20,听2017 by ACRE policy analyst Jacob Bundrick in听Bloomberg BNA鈥榮 鈥淒aily Tax Report: State.鈥�
  • 听op-ed published听August 26,听2017 by ACRE policy analyst Jacob Bundrick in the听Arkansas Democrat-Gazette.
  • 听op-ed published July 22,听2017 by by ACRE Scholar Dr. Jeremy Horpedahl and Ms. Nicole Kaeding of the Tax Foundation in the听Arkansas Democrat-Gazette.
  • 听op-ed published July 20,听2017 by ACRE Director Dr. David Mitchell听in the听Arkansas Democrat-Gazette.
  • 听op-ed published May 4, 2017 by ACRE scholar Dr. Jeremy Horpedahl in the听Arkansas Democrat-Gazette.
  • 听op-ed published December 19, 2016 by ACRE Director Dr. David Mitchell in the Arkansas Democrat-Gazette.
  • commentary published December 7, 2016 by ACRE policy analyst Jacob Bundrick and Dr. Dean Stansel, an economist at Southern Methodist University鈥檚 Cox School of Business in the Dallas Morning News.
  • op-ed published November 28, 2016 by ACRE Scholar Dr. Jeremy Horpedahl and Ms. Nicole Kaeding of the Tax Foundation in the Arkansas Democrat-Gazette.
  • op-ed published October 22, 2016 by ACRE policy analyst Jacob Bundrick in the Arkansas Democrat-Gazette.
  • Policy analyst Jacob Bundrick’s recent blog post on tax breaks and subsides in Arkansas was recently cited in a by Mr. Dane Clark of Fort Smith in the听Lonoke Democrat. Clark’s letter was circulated in several local Arkansas papers like the听The Helena Arkansas Daily World,听the Fort Smith Times Record, and the听Arkansas News Bureau. This blog post was based on Bundrick’s听recent听policy review, Tax Breaks and Subsidies:听Challenging听the Arkansas Status Quo.
  • op-ed published October 10, 2016 by ACRE policy analyst Jacob Bundrick and听Rajshree Agarwal, the director of the Ed Snider Center for Enterprise and Markets at the University of Maryland’s Robert H. Smith School of Business in听The Baltimore Sun.听
  • 听op-ed published September 3rd, 2016 by ACRE policy analyst Jacob Bundrick.听Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed听published July 16, 2016 by ACRE Policy Analyst Jacob Bundrick. Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed published April 29, 2016 by ACRE Scholar Dr. Jeremy Horpedahl.听Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed published April 9,听2016 by ACRE Policy Analyst Jacob Bundrick. Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed published March 7, 2016 by ACRE Policy Analyst Jacob Bundrick.听Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed published听February 6, 2016 by ACRE Policy Analyst Jacob Bundrick.听Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed听published December 21, 2015 by ACRE Policy Analyst Jacob Bundrick.听Arkansas Democrat Gazette and Arkansas Online.
  • 听op-ed听published听November 30, 2015 by ACRE Policy Analyst Jacob Bundrick.听Arkansas Business.
  • 听commentary published听May 25, 2015听by ACRE Policy Analyst Jacob Bundrick. Arkansas Business.

Blog Posts:

Learning From Other States On Tax Reform posted on听The ACRE Review听on May 15, 2018.

Are Targeted Business Subsidies Good For Economic Growth? posted on The ACRE Review听December 8, 2017.

Why听Financial听Incentives for Businesses Put Taxpayers at Risk听by ACRE Policy Analyst Jacob Bundrick,听posted on The ACRE Review听September 13, 2016.

How Governments Use Financial Incentives to Try to Steer the Economy听by ACRE Policy Analyst Jacob Bundrick,听posted on The ACRE Review听September 6, 2016.

How Tax Breaks and Subsidies Cost You and the Government Money听by ACRE Policy Analyst Jacob Bundrick,听posted on The ACRE Review听August 30, 2016.

Why Financial Incentives Do Not Increase Economic Activity听by ACRE Policy Analyst Jacob Bundrick, posted on The ACRE Review听August 23, 2016.

Tax Incentives and Subsides: Two Staples of Economic Development听by ACRE Policy Analyst Jacob Bundrick,听posted on The ACRE Review听August 19, 2016.

State Incentives in Arkansas: A Friendly Debate in the Arkansas Democrat-Gazette听posted on The ACRE Review April 29, 2016.

Making Cents of $18 Million听by ACRE Scholar Dr. Jeremy Horpedahl, posted on The ACRE Review February 29, 2016.

Taxes Take their Toll on Arkansas Manufacturing听by ACRE Policy Analyst Jacob Bundrick,听posted on The ACRE Review July 10, 2015.

Videos: