In today’s Washington Post, Michael Gerson wrote about Congressman Jack Kemp’s support for immigration reform and other (as he called them) “bleeding heart conservative” initiatives. Setting aside the partisan political issues tackled in Gerson’s article, his piece is a reminder that while Kemp may be best known as the affable advocate for supply-side tax policy, he also had an interesting perspective on the role of government in tackling social challenges like poverty.
As a HUD Secretary and Congressman, Kemp was a longtime advocate of employing the tax code as a market driven approach to incentivize private sector investment in low income communities. Beginning with the Tax Reform Act of 1986 (P.L. 99-514), Congress increasingly followed Kemp’s lead. The 1986 Act established the Low Income Housing Tax Credit (LIHTC), which is now the nation’s largest financier of affordable housing. The Omnibus Reconciliation Act of 1993 (P.L. 103-66) permanently codified the LIHTC and also created Renewal Communities, Empowerment Zones and Enterprise Communities, programs with defined geographies for revitalization. These programs not only served to assist individuals and families obtain affordable housing and build and grow small businesses, they helped provide investments in communities that revitalize local economies.
Building on the success of that model, Congress enacted the Community Renewal Tax Relief Act of 2000. The Clinton-Hastert legislation included $25 billion in new authorities, including the creation of a companion New Markets Venture Capital program administered by the Small Business Administration, 40 new Community Renewal Zones, an increase in the Low Income Housing Tax Credit, and of course, the creation of the New Markets Tax Credit.
The Community Renewal Tax Relief Act authorizing the New Markets Tax Credit drew support from across the political spectrum including prominent Republican Members of Congress such as Senator Olympia Snowe (ME), Sen. Rick Santorum (PA), Rep. JC Watts (OK), and then Rep. James Talent (MO). This tradition of bipartisan support for the New Markets Tax Credit continues to this day, and its roots can arguably be traced back to Jack Kemp.