Tax Incentives and Their Benefits to Communities | Free Essay Example

Tax Incentives and Their Benefits to Communities

Words: 559
Topic: Politics & Government

Incentives are benefits offered to people to encourage them to engage in a particular activity. In particular, tax incentives entail lowering taxes for companies and individuals in exchange for specific acts from them. Additionally, tax incentives are used to encourage citizens to undertake socially responsible behaviors that benefit the community (Huseynov & Klamm, 2012). Notably, incentives are utilized to persuade organizations and individuals to build investments that benefit society.

Community health programs, as well as developmental programs, are enhanced through the use of tax incentives. Through the use of these inducements, authorities have a platform for rewarding positive behavior and promote hard work. Despite this, incentives’ ability to speak to people’s self-interest is the other reason tax incentives are used to support community health programs and development (Spence, Holt, Sprysak, Spencer, & Caulfield, 2012). Human beings are influenced by the notion that people should only work if they are paid. In such a way, providing incentives is the most efficient way to convince citizens to engage in activities they would never undertake.

Furthermore, the use of tax incentives is precipitated by the fact that they help make more allies than foes. In particular, the use of incentives can be equated to the adage “You can catch more flies with honey than you can with vinegar” (von Tigerstrom, Larre, & Sauder, 2011). Hence, using incentives as opposed to regulation can help in garnering support for public health programs and development. The implication is that incentives endear the public to a particular aspect, thereby making it easier to achieve societal goals. Besides, incentives are essential in supporting community programs since they assure citizens that community-building initiatives are both profitable and feasible. In such a way, reassuring citizens can result in higher participation in health and social development programs.

While tax incentives can be used to support community programs and development, there are specific situations where such incentives can be used. Tax incentives are used to meet local educational, employment, housing, and transportation requirements (Barrow & Rouse, 2016). These community needs are more easily met through the use of these incentives. In addition to this, tax incentives can be used to limit or encourage growth. In particular, incentives are useful in encouraging the public to preserve open space and redevelop deserted areas, as well as, rehabilitate empty buildings into affordable houses. Overall, incentives can be used to implement community growth plans effectively.

Through the use of tax incentives, environmental problems can be easily eradicated. In most regions, federal and local governments use incentives to encourage locals to reduce pollution, build greenhouses, and use alternative energy. Correspondingly, incentives can make the locals sensitive to energy conservation, corporate social responsibility, and the need for eco-friendly industrial processes (Huseynov & Klamm, 2012). Besides, reducing environmental problems, incentives can be used to revitalize neighborhoods, and communities. Notably, cuts may be used to attract companies to rehabilitate local institutions, build mixed-income housing. Furthermore, tax reductions may be used to encourage people to engage in organic farming.

Overall, tax cuts are useful in obtaining social, monetary, and aesthetic ends that benefit the community. In particular, reductions, when combined with regulation, can change the way citizens, and companies conduct their business. Notably, incentives make people willing to adopt initiatives that benefit themselves as well as the whole community. Tax authorities are therefore encouraged to implement tax incentives whenever possible.


Barrow, L., & Rouse, C. E. (2016). Financial incentives and educational investment: The impact of performance-based scholarships on student time use. Education Finance and Policy, 28-31.

Huseynov, F., & Klamm, B. K. (2012). Tax avoidance, tax management, and corporate social responsibility. Journal of Corporate Finance, 18(4), 804-827.

Spence, J. C., Holt, N. L., Sprysak, C. J., Spencer-Cavaliere, N., & Caulfield, T. (2012). Non-refundable tax credits are an inequitable policy instrument for promoting physical activity among Canadian children. Canadian Journal of Public Health, 175-177.

Von Tigerstrom, B., Larre, T., & Sauder, J. (2011). Using the tax system to promote physical activity: Critical analysis of Canadian initiatives. American Journal of Public Health, 101(8), e10-e16.