Pew: Maryland Leader In Evaluating Tax Incentives

The Pew Charitable Trusts has named Maryland one of ten leading states in tax incentive evaluation, with plans for review of the effectiveness of its incentives, experience in producing quality evaluations, and process for informing policy choices. Pew lauds Maryland in its latest report, How States Are Improving Tax Incentives for Jobs and Growth: A national assessment of evaluation practices, issued this month.

From the report:

• Maryland is leading other states because it has a well-designed plan to regularly evaluate tax incentives, experience in producing quality evaluations that rigorously measure economic impact, and a process for informing policy choices.

• Lawmakers have used the evaluations to make improvement to incentives, including a tax credit for rehabilitating historic buildings.

• Since new incentives are not automatically added to Maryland’s review schedule, lawmakers will need to update the schedule periodically to ensure that it remains comprehensive.

Maryland first required tax credit evaluations under the Tax Credit Evaluation Act of 2012, which established a legislative process for evaluating certain credits. The Department of Legislative Services (DLS) is required to publish a report evaluating the tax credit. The report submitted by DLS must discuss (1) the purpose for which the tax credit was established; (2) whether the original intent of the tax credit is still appropriate; (3) whether the tax credit is meeting its objectives; (4) whether the goals of the tax credit could be more effectively carried out by other means; and (5) the cost of the tax credit to the State and local governments. The evaluation committee must hold a public hearing on the evaluation report, and is required to submit a report to the General Assembly that states whether or not the tax credit should be continued, with or without changes, or terminated.