Policy Documents

Research & Commentary: Tax Increment Finance

compiled by Diane Carol Bast –
November 1, 2006

Tax increment financing is a popular economic development tool in municipalities across the country.

TIFs use the expected growth in property tax revenues from a designated geographic area to finance bonds used to pay for goods and services calculated to spur growth in the TIF district. Initially designed for use in urban “blighted” areas, TIF districts today are used for development of downtown financial districts, upper-income housing development, and other purposes unrelated to blight.

The spread of TIF districts is controversial because TIFs divert property tax revenues away from school districts, park districts, and other local government agencies. TIFs also enable the forced taking of property from private owners to politically favored developers, an abuse of eminent domain that Illinois state legislators sought to limit through adoption of the Equity in Eminent Domain Act, signed into law by Governor Blagojevich on July 28.

This Research & Commentary package collects several documents addressing the issue, offering a representative sample of materials available from The Heartland Institute on issues related to TIFs and other economic development issues. The table of contents identifies additional resources on this issue.