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Tax Abatement Case Study

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In the case of a tax abatement for the City of Hometown is first weighing the costs and the benefits of bring such a program to the city. If the benefits outweigh the costs, then I believe it would be beneficial to the community. The current unemployment rate of Hometown 9.5% which is MUCH HIGHER than the United States which was 5.0% in December 2015 (Bureau of Labor Statistics, 2016). Tax abatements can flourish in areas with higher unemployment rates such as Hometown. The tax abatement would benefit the citizens of Hometown who are unemployed and looking for jobs. The company asking for the tax abatement has stated the creation of the development will require hiring 30-40 people, of which the company has stated they will make an effort to hire individuals in Hometown. Furthermore, the Mayor and City Council must weigh the cost of what the revenue of the property taxes would bring for the city versus what the overall cost of having a new development company come to Hometown.

The Major and City Council should focus on determining whether or not the jobs required of the new development will pay higher wages. If the opportunities are lower paying jobs that do not provide a sustainable income for the employees, it would be a disadvantage to the community overall. Another factor the Mayor and the City Council should focus on is bargaining with the development company for a guarantee for a certain amount of the total employees hired be from the city of Hometown. This would guarantee that the jobs needed for the community are in fact going to happen.

Besides the guarantee of a certain number of jobs guaranteed to
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(1996). Eight issues for policy toward economic development incentives. Retrieved from https://www.minneapolisfed.org/publications/the-region/eight-issues-for-policy-toward-economic-development-incentives.

Labor Force Statistics from the Current Population Survey. (2016, January). Retrieved from
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