Sweetheart Tax Deals
Faculty Research Director
Project Team Leads
Thousands of cities, counties, and school districts give companies big tax breaks to relocate to their area. These “sweetheart” tax deals are generally bad for the economy, and they gobble up tax revenue that might otherwise be used for roads, water, parks, internet access, and schools. Local governments have a professional obligation to disclose these tax abatements in annual audit reports. But do they? And are they more likely to disclose if they are reminded of the disclosure standard or actual laws that require transparency? The Sweetheart Tax Deal team conducts an audit experiment on the disclosure of tax incentives by state and county governments as well as school districts. In AY2022-23, the team fully completed the experiment on Texas local governments. Specifically, the team (1) developed the coding and procedures for email automation through Google Colab that allows for sending emails to subjects in large batches. This approach can be applied to the next stages of this project and other projects with the similar need for email automation; (2) conducted three rounds of automatic emailing (one initial contact and two follow-ups on non-response) to 913 financial officers in Texas counties/cities/school districts and coded their responses to our request for tax incentive information disclosure; (3) Crosschecking the Chapter 313 (for school districts) and Chapter 380 (for county- and city-level governments) with annual comprehensive financial reports (ACFRs) of these local governments to determine the de facto disclosure compliance.
Although we have not detected a significant treatment effect—respondents are not more likely to disclose their tax incentive information when we prime the legal disclosure requirement GASB 77—this is still a theoretically interesting finding as this well-designed and executed treatment has not influenced behaviors of respondents. Our team plans continue data collection as needed and prepare a writeup of this experiment for the Journal of Experimental Political Science. As a next step, we also hope to upscale the experiment on a national level (excluding Texas) with more refined designs.
Project Team Co-Leads
IPD Project Team Leader
Zhizhen Lu is a Ph.D. candidate in the Department of Government and is the Project Team leader for Sweetheart Tax Deals. Zhizhen studies the regulatory politics of strategic interactions between states and multinational corporations in the context of business compliance with economic sanction. Prior to his academic career, he worked at China Policy in Beijing as the lead macroeconomic analyst. He also has professional experiences at the European Union Delegation to China, the European Union Chamber of Commerce in China, and the World Resource Institute. Zhizhen holds an M.A. in International Trade and Investment Policy from the Elliott School of International Affairs at the George Washington University.
Jawad is a sophomore economics major at the University of Texas at Austin currently in his first year as a member of the Sweetheart Tax Deals team. He is currently working as a peer mentor for the Path to Admission through Co-Enrollment (PACE) program, volunteers for the Refugee Student Mentor Program, and is a general member of the Texas Economics Association. He is interested in research involving finances, transparency, and the government.
Meghan V. Nigudkar
Meghan Nigudkar is from Denver, CO. She is a sophomore double majoring in Corporate Finance and Economics. She can talk about anything from skiing to her favorite coffee shops in Austin. She is involved with a couple organizations on campus and loves to do volunteer work! Most importantly, she have a passion for research, learning new topics, and collaborating with her team!
Sydney N. Stellato
Sydney Stellato is pursuing a double major in Sustainability Studies and Geography. Her academic journey is characterized by a profound passion for exploring the realms of environmental and agricultural law. Her research interest lies in intricate webs of sustainability policy and corporate practices.In addition to working as a research assistant on the Sweetheart Tax Deals Project, Sydney dedicates her time as an intern with UT’s Resource Recovery, where she actively engages in efforts to curtail the influx of waste into landfills.
Melissa L. Ionson
Melissa Ionson is a first-year Public Affairs Masters student at the LBJ School of Public Affairs at the University of Texas. She is looking forward to bringing an international perspective from Canada. With an undergraduate degree in Community and Criminal Justice and work experience within the Ministry of the Attorney General of Ontario, she is poised to specialize in National Security and Immigration. Melissa is deeply passionate about public service and is committed to leveraging her diverse academic background to make a meaningful impact in these crucial fields. She hopes to provide fresh insights and innovative solutions for effective policymaking and data collection.
Orlando Di Leo
Orlando Di Leo is a senior at the University of Texas at Austin pursing a Bachelor of Arts in Economics with a minor in finance. His fields of interest are energy, monetary, and public economics. His research experience includes studying the effects of the clean energy transition and carbon cap-and-trade programs on unemployment in the United States. He has served as an intern for the Texas Comptroller’s Office in the Data Analysis & Transparency division, where he collaborated on financial transparency initiatives and economic incentives offered by the Texas government. After graduation, he plans to continue his studies by pursing a Master of Arts in Economics.