Reader comments on Cleveland City Council’s examination of tax abatement policy
To the editor:
(Plain Press, January 2020) “A tax abatement is a reduction of taxes granted by a government to encourage economic development. The most common type of tax abatement is a property tax abatement granted to a business as an incentive to come to a city or expand existing operations within the city.” Source: Google.
It is my understanding that tax abatement in the city of Cleveland first occurred in 1977 under the Mayor Ralph Perk administration. The questionbefore any tax abatement proposal must be the acceptable trade off of granting the tax break in exchange for the tangible benefits the business will bring. I propose that Cleveland State University graduate students in the Department of Urban Affairs conduct their own private study (to be madepublic at a later date) investigating line-by-line the amount of the tax break given, and the true tangible results achieved.
For example, an article by Jay Miller in the April 16, 2019 issue of Crain’s Cleveland Business titled “Cleveland will review its tax incentive policy” says, “The city’s economic development incentive program dates to 1977, when Mayor Ralph Perk gave tax abatement for a $50 millionheadquarters at East Ninth Street and Euclid Avenue for to National City Bank, now a part of PNC Bank.”
The question is: Was it worth it? How many jobs were created? What were the salaries? Did the bank provide a positive competitive experience vis-à-vis the other banks in the area? What positive externalities resulted from this tax abatement?
Most think that only items that could be quantified should be considered but unfortunately there are many more factors to consider when reviewing such a proposal. Qualified measures must be applied too. CSU has a lot of research to do by analyzing every tax abatement (big or small) since 1977. I hope they welcome the
challenge. And remember when all else fails common sense prevails. Hopefully Jane Jacobs can weigh in on this too.