As is customary, members of the Senate Finance Committee submitted written questions to Treasury Secretary Steven Mnuchin following his confirmation hearing on January 19th. Senators Wyden, Cardin, Cantwell, and Brown probed the Trump Administration’s interest in the NMTC in the context of both tax reform and Trump’s interest in revitalizing low income urban neighborhoods and rural towns. Mnuchin did not commit one way or the other on the NMTC or other tax credits, as is expected at the beginning of a tax reform process, but rather, promised to review the NMTC and to ensure that tax reform benefits long-distressed communities. Below, find the written questions and Mnuchin’s answers.
Senator Ron Wyden
During the campaign, the President often expressed his intention to bring jobs and investment back to low income, high unemployment rural communities, and urban areas. Over the last 15 years, the New Markets Tax Credit has demonstrated that it is an important tool for revitalization. As the Administration assembles its tax reform package, I hope you will take a serious look at making the New Markets Tax Credit permanent. Since the credit was launched in 2001, $38 billion in direct New Markets Tax Credit investments were made in businesses and these New Markets Tax Credit investments leveraged over $75 billion in total capital investment to businesses and revitalization projects in communities with high rates of poverty and unemployment. This financing has resulted in the creation of 750,000 jobs and the financing of commercial and industrial facilities, day care and health care centers, mixed use facilities and small business loans, all of which improve local economies and the quality of life in distressed neighborhoods. In Oregon, $843 million in New Markets Tax Credit capital has leveraged a total of $1.73 billion in financing for a range of projects and created nearly 15,000 construction jobs and more than 16,000 permanent jobs. For example, Chaucer Foods created about 73 new jobs in Forest Grove, Oregon with the opening of a new freeze-dried food processing facility. NMTC financing helped Advantage Dental, one of Oregon’s largest dental health care providers for low-income persons within the state serving over 200,000 patients, finance seven additional dental clinics providing dental services to the uninsured and low income individuals. In Ontario, OR, $4 million New Markets Tax Credit allocation facilitated the purchase and necessary improvements of a factory for Fry Foods, Inc., bringing needed jobs to the area. And in Dillard, Oregon, the NMTC helped Roseburg Forest Products, a manufacturer of wood products, obtain working capital for capital improvements needed to remain competitive and retain critical manufacturing jobs. The influx of working capital allowed RFP to install new equipment and expand its facilities so that RFP can capitalize on the timber industry’s recovery and retain 971 jobs. The New Markets Tax Credit has bipartisan support, and has been very successful in leveraging private sector capital for investment on some of the poorest urban and rural areas of the America. It will be a valuable tool in your efforts to bring jobs back to communities left behind by the economic recovery. Do I have your commitment that you will work with me to make permanent this important program? Steven Mnuchin: I share your commitment to bring back jobs to these communities that have been so gravely affected by economic conditions for which they had no part in creating. If confirmed I will work with you to make sure that poorest and rural areas of American are no longer left behind.
Senator Maria Cantwell:
Please tell me if you consider the following provisions of tax code special interest deductions: a. The Low Income Housing Tax Credit – a provision the Chairman, Ranking Member and I strongly support expanding, that has financed nearly 3 million affordable homes for low-income working families since its creation in the last comprehensive tax reform, that sustains nearly 100,000 jobs annually. b, The New Markets Tax Credit – which has leveraged nearly $75 billion in total capital investment in low-income urban and rural communities across the country. Steven Mnuchin: If confirmed, I will work with Congress to determine which tax credits or deductions warrant retention, modification, or elimination in order to maximize economic growth and job creation. If confirmed, I will work with your office to review the New Markets Tax Credit program.
Senator Ben Cardin
During his campaign, the President often mentioned his intention to revitalize low income urban neighborhoods and to encourage job creation through infrastructure investment. Credits like the New Markets Tax Credit program and Historic Tax Credit program have been an important factor in the revitalization of communities across the country, including in my hometown of Baltimore. Working with Senator Blunt, Senator Schumer and others I was pleased that NMTC was extended for five years in the bi-partisan PATH Act of 2015. I intend to introduce bipartisan legislation in this Congress to make NMTC a permanent part of the tax code. Since the credit was launched in 2001, $38 billion in direct NMTC investments were made in businesses and these NMTC investments leveraged over $75 billion in total capital investment to businesses and revitalization projects in communities with high rates of poverty and unemployment. This financing has resulted in the creation of 750,000 jobs and the financing of commercial and industrial facilities, day care and health care centers, mixed use facilities and small business loans, all of which improve local economies and the quality of life in distressed neighborhoods. In Maryland, some $800 million in NMTC capital has leveraged more than $2 billion in other financing for a range of projects and created over 25,000 construction jobs and more than 7,000 permanent jobs. NMTC has been an important factor in the revitalization of East Baltimore and the establishment of a Life Sciences Building that is a key element of a large effort to support business and civic leaders to revitalize that area. It is also a key financing source for a new facility at Baltimore’s Maryland Institute College of Art, as well as a new business incubator that will foster the growth of entrepreneurial food vendors. Another infrastructure and community development program that has seen similar success and bipartisan support is the Historic Tax Credit. Working with Senator Collins, I’ve introduced—and plan to reintroduce—legislation that would encourage economic development and job growth across the country by making common-sense changes and enhancements to the federal HTC. Since the creation of the credit, the HTC program has generated $78 billion in historic preservation activity to rehabilitate more than 41,250 historic properties, including the creation of over 525,000 housing units, of which approximately 150,000 are low and moderate-income units. Historic preservation programs have created more than 2.36 million jobs nationwide since 1978 (85,058 new jobs in FY 2015). A recent study by the National Trust for Historic Preservation estimates that every $1 of credits generates a minimum of $4 of private sector investment. In Maryland, the federal HTC has supported hundreds of projects that have spurred economic growth in communities around the state, ranging from the development of a multicultural service center to affordable housing units for teachers and office space for nonprofit educational organizations. Given the President’s goals, do you agree that credits like the NMTC and HTC can play a critical role in community redevelopment and infrastructure? Can you commit to retaining these important incentives in a Trump Administration tax reform package? Steven Mnuchin: Our objective is to grow the economy and economic opportunity. If confirmed, I will work with you and other Members of Congress to ensure that the appropriate incentives are retained.
Senator Sherrod Brown
Does the Administration support making the New Markets Tax Credit permanent and expanding the size of the annual allocation to meet demand? Steven Mnuchin: The Trump Administration is committed the growing the overall economy and improving efficiency in our tax code. If confirmed, I pledge to use these principles as guidelines when working with Congress to enact measures that will assist in meeting our common goal of reducing overall tax burden while growing the economy.