Competition to lure corporations has become an enormous issue between states. Smaller communities feel unable to participate in economic development opportunities since their budgets do not provide the necessary funding. In 1979, the Texas state legislature passed the Development Corporation Act in an attempt to aid the smaller communities' quest for economic development. The Act allowed for the creation of local development corporations; however, it did not provide a sufficient funding source to assist the corporations. Therefore two local sales options were established. This paper reports the findings of an analysis of per capita income and employment changes after the adoption of an economic development sales tax. The analysis showed no statistically significant impacts on cities adopting an economic development sales tax when compared with non-adopting cities
