Giving Compass' Take:

• Nonprofit Quarterly discusses new research about tax incentives for corporations and how they don't produce the economic development promised.

• In light of so much talk out of Washington about cutting corporate tax rates, it's useful to not only dig into the numbers but come up with ways to bring all voices to the table, not just the extremely rich.

• Here's another angle on tax overhaul and the immorality of inequality.

An equitable and inclusive economic system is something that many nonprofit organizations care deeply about. In recent years, nonprofits have embraced and explored community wealth building strategies designed to increase the knowledge, assets, and opportunities of the communities they serve. Nonetheless, local officials largely persist in using tax abatements to attract companies to relocate as a primary “economic development” strategy, often at a high cost to the public.

Tax incentives have been used for decades and have recently come into the public consciousness with the highly visible efforts to recruit Amazon’s HQ2. Collectively, cities and states in the US spend upwards of $80 billion annually on tax incentives, an amount equivalent to the GDP of the state of Hawaii. Public investments such as incentives should be subject to increased scrutiny, especially given that some research shows that incentives have little to no impact on job creation at all.

The most comprehensive research to date on incentives is from Timothy Bartik of the W.E. Upjohn Institute for Employment Research, which recently published a new report, “A New Panel Database on Business Incentives for Economic Development Offered by State and Local Governments in the United States,” that examines the use of incentives across states and their effects on economic development.

Bartik’s research suggests that many incentives are costly and do not produce the desired results, noting, “Incentives are still far too broadly provided to many firms that do not pay high wages, do not provide many jobs, and are unlikely to have research spinoffs. Too many incentives excessively sacrifice the long-term tax base of state and local economies. Too many incentives are refundable and without real budget limits.”

Read the full article about inclusive economic models by Derrick Rhayn at nonprofitquarterly.org.