Stealing from the Future
Borrowing from the future without understanding the actual risks, and then spending the money carelessly? Sounds like Wall Street all over again. But this time, it's a little-known tax mechanism known as tax-increment financing, or TIF.
TIF is an ingenious local economic development tool that lets city governments borrow against future tax revenues for a given area of town in order to invest in new projects today. While TIFs can work as intended and spur development, they are also highly vulnerable to abuse because their details and implementation are shrouded in complexity: a convenient temptation for expedient politicians.
TIF lets politicians borrow money from the city's future tax base, and then spend it on development projects with minimal public or legislative oversight. The scheme is sustained by the the supposition that the TIF bond money, if well-spent today, will pay for itself with future tax revenues generated by new development.
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