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House Research explains mechanics, limits and 'but-for' test for tax increment financing (TIF)
Summary
Justin Cope, legislative analyst with House Research, described tax increment financing: how counties certify districts, how captured net tax capacity is calculated, illustrative revenue flows to taxing jurisdictions and legal limits including the 'but‑for' test and earmarking requirements in the TIF Act.
Justin Cope, legislative analyst, House Research, briefed the House Tax Committee on tax increment financing (TIF), its mechanics and statutory limits.
Cope said local governments adopt a TIF plan and request county certification of the district’s original net tax capacity and local tax rate. Each year the auditor subtracts the original net tax capacity from current net tax capacity in the district to calculate captured net tax capacity;…
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