Entrepreneurial Activity in Illinois: Investigating the Impact of Tax Incentives Developmental Programs

The state of Illinois is currently experiencing business and resident out-migration, a trend that suggests the state has failed to create an environment in which it is attractive for individuals to live and do business. In attempts to curb this out-migration, politicians and policy analysts have continued to add to Illinois’s portfolio of tax-based development programs. Although these programs have become increasingly popular in the policy arena, the economics literature suggests that they generally fail to achieve their goals and often end up creating additional barriers to entrepreneurial activity. The analysis in this paper first examines the link between public policy and entrepreneurship on a conceptual level. Then, after broadly examining each of Illinois’s current tax incentive development programs, the analysis shifts to a case study approach.