How does granting tax abatements and TIF partnerships help Carmel residents and small business owners?
Good question and we are happy to explain! The City of Carmel – like just about every City in America – works hard to attract new companies and new jobs to their communities. Our goal is to have a diverse local economy where families both young and old can thrive. We want our young generation to choose Carmel as a place to grow their careers and begin their families, which is why we work so hard on economic development initiatives and quality of life strategies.
Every time a dollar is paid in local taxes by a commercial taxpayer, that saves local residents a dollar on their tax bills.
So how does this help our residents and small businesses? From a residential tax perspective, that is pretty easy to answer. Every time a dollar is paid in local taxes by a commercial taxpayer, that saves local residents a dollar on their tax bills. The more businesses in the community, the less residential property taxes are needed to maintain the tax revenues needed to run a city. (This is why Carmel has historically had one of the lowest tax rates in Indiana, despite the services we offer). The impact on local businesses is also very positive.
Think about what happens whenever a company announces it will build or move its headquarters to Carmel. They bring with them dozens, sometimes hundreds of jobs – some already filled, some to be filled in the future – which starts a “domino effect” of positive economic impacts:
- A house or condo is purchased, or an apartment rented.
- Houses, condos, apartments all need furnished – more money spent.
- Cars, clothes, new bank accounts, haircuts, auto maintenance … all the things you might expect.
- Insurance, financial planning and other professional services will be needed.
- Eating out at local restaurants, drinking local craft beers, heading to a favorite pub or winery.
When you add it all up, a new employee at a Carmel company has the potential and likelihood of spending thousands of dollars in Carmel, often at locally-owned small Carmel businesses. How much money is spent by each new employee? That has become a matter of research and some of the most recent studies have shown what is called a “multiplier effect” on the local economy.
According to one of the nation’s premier economists – Enrico Moretti, who wrote The New Geography of Jobs – each high-tech or “innovation” job (the kinds of jobs we typically attract in Carmel) will on average create five additional jobs – from professional roles such as doctors, lawyers, real estate agents and bankers; to non-professional jobs in the service industry. That means each resident benefits for each new innovation job created in Carmel.
You can read the original research here.
Authored by Laura Campbell, Ron Carter, Sue Finkam, Anthony Green, Bruce Kimball, Kevin Rider and Jeff Worrell