Professor Deanna Newton, "Inclusive Prosperity" -- Texas A and M Law Review (forthcoming)

Professor Deanna S. Newton's article, "Inclusive Prosperity," will be published in the Texas A&M Law Review.  The article considers economic development tax incentives that can be designed to promote inclusive prosperity. 

Abstract of Inclusive Prosperity

Gentrification affects almost every American city to varying degrees, involving different parties with different interests. While positive changes are associated with gentrification, low-income individuals are often displaced from their communities due to increased rent costs and property values. Throughout our nation’s history, the federal government has offered tax incentives to those who invest in low-income areas that have historically suffered disinvestment. These tax incentives encourage investment by providing tax benefits and minimal investment constraints. However, because investors are not required to tailor their investments to meet the needs of communities, the unintended consequence of these programs is that residents do not typically benefit and are instead displaced from their communities. There is little in the current literature that proposes how economic development tax incentives should be practically designed to ensure community members are not displaced.

This Article argues that communities can undergo development without displacing current residents through economic development tax incentives that promote inclusive prosperity – ensuring that all members benefit from the development. These incentives should be calibrated to prioritize the needs of existing residents. I propose providing tax incentives to investors who pay residents a livable wage, who invest directly in nonprofits that have community members on their boards, or who invest directly in a community fund that can provide residents with rent and homeownership resources.

Economic development tax incentives can be designed to promote inclusive prosperity by providing the most lucrative tax incentives to investors who contribute capital directly to communities or to locally based nonprofit organizations. As an example of what this sort of investment can achieve, this Article highlights the Dudley Street Neighborhood Initiative, a nonprofit organization in Boston, Massachusetts, which illustrates how, if the above proposals are implemented, communities can develop without displacing residents.