Tax Incentive Evaluation Law: Washington, D.C.

Tax Incentive Evaluation Law: Washington, D.C.

This page is no longer being updated. As of June 15, 2017, newer tax incentive evaluation fact sheets are available here.

To ensure that economic development tax incentives are achieving their goals effectively, many states have approved laws requiring regular, rigorous, independent evaluations of these programs. For a list of states that have passed evaluation laws since the start of 2012, click here.

Washington, DC

B20-750, enacted September 23, 2014

What it does

Requires evaluation of all major tax incentives

The chief financial officer reviews tax incentives and other types of tax credits, exemptions, and deductions on a five-year cycle.

The reports include policy recommendations and evaluate whether credits, exemptions, and deductions meet their intended goals.

The analysis of economic development tax incentives includes an additional requirement to measure economic impact.

Sets standards for economic analysis

The reports assess whether economic growth would have occurred without the incentive.

The analysis examines whether the economic benefits of incentives were offset by negative effects on other businesses.

Excerpt from Washington, D.C.’s law: Evaluations measure economic impact

For tax preferences with an economic development purpose, an analysis that measures the economic impact of the preference, including:

(A) Whether the economic impact of the tax preference would have been expected without the preference;

(B) The extent to which the economic impact of the tax preference was offset by economic losses elsewhere;

(C) The average economic impact for a level of direct expenditures equal to the cost of the tax preference; and

(D) The indirect economic impact effect of the tax preference.

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Issue Brief

Tax Incentive Programs: Evaluate Today, Improve Tomorrow

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Issue Brief

This report advises states on how to design and implement tax incentive evaluation laws, so that these programs are studied regularly and rigorously and so that lawmakers can use the findings to improve economic development policy.