USING FEDERAL TAX POLICY TO INFLUENCE FIRM LOCATIONS: TWO EXAMPLES OF THE IMPACT ON KANSAS COMMUNITIES

Abstract

This report arose from a request for research from the city of Hays, Kansas. City leaders discovered that federal tax incentives affecting U.S. firms operating in Puerto Rico inhibited the ability of Hays to attract new pharmaceutical firms. The city requested a report which would detail the specific tax laws affecting firms which choose Puerto Rican locations and analyze the impact of these tax laws on the ability of Kansas communities to compete. Additionally, the City of Hays wanted to look at broader questions concerning tax incentives. If tax policy had stimulated Puerto Rican development, could similar policies help to revitalize rural communities in the U.S.? If so, what would be the impact of such policies on the federal budget? The following report addresses both the specific issues concerning Puerto Rico and the broader questions of tax incentives for rural communities.