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    Exploring Microeconomics:Tax Incentives to Private Employers

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    Should the government offer more tax incentives to private employers

    © BrainMass Inc. brainmass.com October 10, 2019, 6:18 am ad1c9bdddf

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    The rationale in offering more tax incentives to private employers is to create more entrepreneurs in the private sector thereby creating more employment opportunities. It is widely believed that offering more tax incentives to private employers generates economic growth and jobs.

    However, three empirical researches proved that such thing does not happen. In fact these researchers found out that "it may contribute to a cycle of destructive competition", "negative effect in industries" and "no change in corporate investment levels".

    Zheng and Warner (2010) analyze national surveys of 700 to 1,000 local governments from 1994, 1999, and 2004 to track use of business incentives over time. The 2004 model results ...

    Solution Summary

    The solution premised that tax credit program to private employers lead to increased investment. The expert provides references to aid in the understanding of the question.