Tax Increment Financing in Missouri: An Analysis of Determinants, Competitive Dynamics, Equity, and Path Dependency

Tax increment financing (TIF) has been a popular and controversial economic development tool for several decades. This research considers the determinants of competitive dynamics, equity, and path dependency on TIF use. We use logistic and ordinary least squares regressions on the approval, number, and value of TIFs in Missouri to flesh out the way the determinants contribute to TIF approval, value, and frequency of use. This study finds that there are competitive dynamics that affect TIF use: being adjacent to another city that uses TIFs increases the likelihood that a city will approve a TIF. The study finds evidence that TIF adoption patterns contribute to intermunicipal inequality, and provides some support for the importance of path dependency on TIF use.