Professor Phuong Nguyen has published new research in Growth and Change: A Journal of Urban and Regional Policy examining how tax increment financing (TIF) influences local income.

TIF is the most widely used local economic development tool in the United States. By diverting growth in property tax revenue—the “increment”—to fund projects within designated districts, municipalities aim to stimulate economic development that would not otherwise occur. While previous research has explored TIF’s economic development effects on property values, jobs, and business activity, Professor Nguyen’s new study is the first to measure its impact on residents’ aggregate incomes.

Professor Nguyen’s study fills this critical gap by analyzing a panel of nearly 330 Iowa school districts from 2003 to 2018. Iowa provides a unique setting: it has one of the highest concentrations of TIF districts in the nation and is one of the few states where school districts levy an income surtax, generating unusually detailed district-level income data. Using rigorous econometric methods—including two-way fixed effects, event study designs, Goodman-Bacon decomposition, and Synthetic Difference-in-Differences—the study estimates the causal impact of TIF on local incomes.

The study finds that TIF significantly increases district-level income, including adjusted gross income, taxable income, and the income surtax base. However, these gains are not evenly distributed: school districts with weaker tax bases and higher student poverty see fewer benefits. This raises important questions about the equity of TIF’s benefits and its role in fostering inclusive economic development.

The full article is available in Growth and Change. It marks the fifth research article by Professor Nguyen on TIF in Iowa, following earlier studies of its effects on business entries and exits, on rural school districts’ property tax base and rates, on local governments’ property value, and school district expenditures. Taken together, this body of work offers one of the most comprehensive examinations to date of how TIF reshapes local economies, public finance, and community well-being.