Tax Increment Financing and Missouri: An Overview Of How TIF Impacts Local Jurisdictions

Tax Increment Financing has become a common economic development tool throughout the United States. Tax Increment Financing takes the new taxes that a development generates and directs a portion of them to repay the costs of the project itself. Missouri is one of many states where Tax Increment Financing is authorized for purposes of combating blight, engaging in conservation efforts, fostering economic development, or a combination of those factors. This study provides an overview of the history and basic structure of Tax Increment Financing. It then analyzes the basic tax components of a Tax Increment Financing plan and compares how various aspects, such as tax capture and tax competition, play out in the standard system. The study then reviews the economic literature, and ends with a direct application of how Tax Increment Financing operates within Missouri.

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