Economic Development: An Economic Impact Analysis of Tax Incentives on a Local Economy
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Purpose: The purpose of this project is explanatory. The research describes economic development incentives, consequences and benefits for cities and businesses as well as what type of development incentives are used. Method: This project uses regression analysis to test the impact of a single business on a small community. The research evaluates trends before and after the opening of Cabela's. This project compares the trend of sales tax revenue for Buda and two comparison cities in order to determine the impact Cabela's had on the City of Buda. Results: The City of Buda showed a significantly higher spike in sales tax revenue before Cabela's opened when compared to two neighboring cities. However, the results also show that both comparison cities had a significantly higher trend of sales tax revenue than Buda after Cabela's opened. Cabela's did not have a significant impact on the growth of population in Buda. The data for the impact of Cabela's on business growth did not lend itself to inferential analysis. Discussion: Overall, the research indicates that the construction and opening of Cabela's had a significant impact on the immediate surge in sales tax revenue. Although, minus the secondary benefits to quality of life and stronger business presence, the presence of Cabela's did not lead to a significant increase in the trend of sales tax revenue after Cabela's opened.