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Before supporting a city tax incentive, ask whether it will produce measurable public benefits that would not happen without the subsidy—and whether those benefits justify the full public cost. Examine the counterfactual, net jobs and wages, who gains and pays, and the agreement’s enforcement terms. Headline investment totals alone do not answer those questions.
Start with the public purpose
Ask the city to identify the specific community goal: for example, more employment, higher wages, investment in an underserved area, or progress toward an environmental objective. The proposal should say who is expected to benefit and how success will be measured. Then ask why a tax incentive is the right tool. The Chicago Metropolitan Agency for Planning (CMAP) advises, “Consider non-financial incentives first,” and cautions that incentives may have limited influence on a business’s location or investment decision. Compare the proposal with options such as improving infrastructure or streamlining permitting, rather than assuming a tax break is necessary.
CMAP reports that more than 75 percent of municipalities in northeastern Illinois use incentives. That is a measure of adoption in that region—not evidence that incentives work or that the same pattern applies elsewhere. CMAP’s local incentives guidance also notes risks including infrastructure costs and bidding wars between neighboring governments.
Ask what would happen without the incentive
The central test is additionality: what investment, jobs, or other benefits would occur because of the incentive, rather than anyway? Ask the company and city to explain the alternative scenario, with supporting evidence. A company’s stated possibility of locating elsewhere is not, by itself, proof that the incentive changes its decision.
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Separate gross promises from net effects. A project may create jobs at one site while shifting activity from another neighborhood or nearby jurisdiction. Count jobs and investment that are genuinely additional to the relevant community, and account for activity displaced elsewhere. The OECD’s 2026 practical guide identifies redundancy—activity that would happen without the incentive—and displacement as important adjustments in benefit-cost assessment.
Count the full public cost
The tax reduction or credit is only one part of the cost. Request an estimate that also considers infrastructure and service demands, administrative and compliance expenses, and the opportunity cost of committing public funds to this project rather than another use. Foregone revenue may mean higher taxes or less spending elsewhere; indirect effects such as displacement and redundancy can also change the assessment.
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Ask the city to compare the proposal with realistic alternatives for the same public resources, including non-financial approaches. A claim that an incentive “pays for itself” needs a proposal-specific analysis with a defensible counterfactual; a large investment figure does not establish that conclusion.
Check who benefits—and who bears the costs
Look beyond the number of jobs announced. Ask for estimates of net employment and wage effects, including whether hiring would reduce unemployment or instead displace existing jobs. Consider possible productivity or supply-chain spillovers and whether the project advances other stated goals, such as equity or environmental outcomes.
Make the distribution visible: who receives the tax benefit, who gets the jobs or other gains, and which residents or public services bear the costs? The OECD framework calls for considering employment, wages, spillovers, broader policy goals, revenue forgone, and administrative costs together—not treating any one measure as a substitute for the rest.
Make the agreement measurable and enforceable
Promises should be translated into requirements that can be checked. The agreement should identify targets, deadlines, reporting obligations, inspection access, remedies for missed commitments, and terms for recapture or cancellation. CMAP recommends clear performance targets and attention to living-wage job design.
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Specific legal mechanisms depend on the jurisdiction and program. For example, Texas Comptroller guidance for Chapter 312 describes inspection access, annual compliance certification, recapture when agreed improvements are not made, and cancellation or modification for noncompliance. Those provisions are a Texas example, not a rule that applies to every city or incentive. Review the actual local authority and proposed agreement before treating any safeguard as available.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Require transparent assumptions and public evaluation
Before a vote, ask the city to publish the underlying data, methods, assumptions, expected outcomes, and monitoring plan. The public should be able to see how the city estimated benefits and costs, what would count as success, and when results will be reviewed.
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New York City offers one jurisdiction-specific example: Administrative Code § 11-2901 provides for public evaluation reports that analyze effectiveness against goals, continued relevance, methods and assumptions, and recommendations for future evaluations. It is not a universal requirement. The city considering an incentive should identify the reporting rules that actually govern its program and make evaluation results accessible to residents.
Use a benefit-cost model as an aid, not a verdict
For a more structured estimate, Timothy J. Bartik’s Bartik Benefit-Cost Model of Business Incentives: A User’s Guide (W.E. Upjohn Institute for Employment Research, May 2023) describes a model for state or local projects and programs that estimates job and income effects from user inputs. It is implemented in Excel and Python. Its outputs are estimates: scrutinize the inputs, assumptions, and fit to the locality and proposal rather than treating a model result as proof.
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