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| Regional directory of
links to resources for capital investment incentives and credits or
tax information (see also :
Regional Contacts >) |
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US
: Northeast
NY, CT ,RI, MA, NH, VT, ME |
US :
Great Lakes
OH, KY, MI, IN, IL, WI, MN |
Canada |
Mexico |
|
US : Mid Atlantic
PA, NJ, MD, DE, DC, VA, NC, WV |
US : North Central
MO, KS, NE, IA, SD, ND |
US
: Mountain
AZ, NM, CO, UT, WY, ID, MT |
South
America |
|
US
: Southeast
FL, SC, GA, TN, MS, AL |
US : South Central
TX, OK, AR, LA |
US : West Coast
CA, NV, OR, WA, HI, AK |
Central America, Caribbean |
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Europe |
South
Asia |
Australia, New Zealand |
Middle
East, and Africa |
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China,
Taiwan |
Southeast Asia |
Korea |
Japan |
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Explanation
Investment incentives can take a dizzying array of forms : tax credits, job
credits, employer credits, tax increment financing (TIF), regional
assistance grants, industrial revenue bonds, business incubator programs,
venture capital programs, capital cost reduction, utility discounts, and
infrastructure improvements to name just a few of the many examples.
It can be hard to reliably estimate or model the actual
impact of some of these programs on investments, and the analysis needs to
be specific to individual projects and reflect what is negotiable, so there
is no simple answer to the common question "Where are the best incentives?".
Besides, as areas compete for projects, the array of incentive programs is
constantly changing. Areas which offered high incentives in the past
may no longer be as competitive. It's a very dynamic issue.
A business must be sustainable in the absence of
incentives because incentives programs can be changed unilaterally by
governments at any time, regardless of company performance. For
example, new political leadership may choose to alter a program, such as to
refocus incentives for attraction of other types of companies.
It is therefore a good practice to do financial models for
a project in competing locations without consideration of incentives
initially, and then add the potential incentives as a variable which may
improve the return on investment and reduce the risk or alter the scope of
capital commitments.
Other variables are usually far more critical to location
selection than incentives, so it is important to get those other factors
right before worrying about incentives, because incentives won't compensate
for a poor business location choice, and the ability of governments to
change the rules without recourse is a risk in some places. For
example, if an attractive tax break disappears, what is the impact? |
Use of consultants
While local consultants may be familiar with application procedures and the
details of available incentive programs, experts with experience at
negotiations in more than one area may be able to present a persuasive case
for the most beneficial incentives package. Small projects may
generally get whatever is routinely available, but large projects with
multiple location alternatives may negotiate better incentives deals.
In some cases, available incentives may actually be more
trouble to obtain than they are worth, and it is important to understand
"claw-back" provisions by which incentives can be withdrawn after an
investor has already relied upon them, as in the case of a project which
doesn't meet the expected parameters (jobs created, etc.) on schedule, even
if that is because of a major economic change beyond the control of the
company or the ability of anyone to reliably predict.
The authority of area representatives to negotiate
incentives should not be assumed. For example, the European Union
imposes constraints on incentives, and can rule that a package is
unacceptable even after the company has made the investment in good faith
reliance upon an incentives package which the government officials seemed to
be authorized to offer. Competitors may complain and lobby to have
incentive offers rescinded as an unfair subsidy to investors. Once
again, this is a very complex topic, with potential pitfalls.
Professional help is valuable.
Some areas will actually provide incentives to help cover
the cost of using good consultants for incentive applications and compliance
work because this helps to avoid problems or delays in the process, and
enables executives to focus their own time and effort on more critical
aspects of project planning and implementation. |
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Directories of economic development
organizations, investment promotion agencies, professional service
providers, and other resources |
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