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The Economic Impact of Tax Policy Incentives: An Analysis of the Gulf Opportunity Zone Act of 2005

Advances in Taxation

ISBN: 978-1-78441-120-6, eISBN: 978-1-78441-119-0

ISSN: 1058-7497

Publication date: 18 November 2014

Abstract

Purpose

This research quantifies the economic impact of regional tax policy incentives included in the Gulf Opportunity Zone Act of 2005.

Design/methodology/approach

This research utilized linear mixed-effects modeling and multiple regression procedures with a matched sample panel dataset from 2002 through 2008 containing real-world county-level economic data.

Findings

The results indicated that the regional tax incentives provided by the GO Zone Act did not generate significant increases in key economic indicators included in this study. These tax incentives were intended to spur economic recovery, but based on research findings, they do not appear to have had the impact desired by Congress.

Research limitations/implications

Archival empirical data for the affected region make this study possible but also limit the ability to generalize these results to other regions. In addition, empirical research utilizing real-world data can be prone to internal validity issues that exist due to lack of environmental controls and other possible causal factors.

Originality/value

This research adds to the existing literature by using real-world county-level economic indicators to test the impact of tax policy investment incentives at the regional level and minimizes some of the issues addressed by prior empirical research and provides evidence on the effectiveness of tax policy investment incentives at the regional level.

Keywords

Citation

Bunker, R.B. and Shughart, W.F. (2014), "The Economic Impact of Tax Policy Incentives: An Analysis of the Gulf Opportunity Zone Act of 2005", Advances in Taxation (Advances in Taxation, Vol. 21), Emerald Group Publishing Limited, Bingley, pp. 173-200. https://doi.org/10.1108/S1058-749720140000021005

Publisher

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Emerald Group Publishing Limited

Copyright © 2014 Emerald Group Publishing Limited