The Republican leadership released its tax reform framework but failed to include the New Markets Tax Credit, a proven tool for community revitalization and job creation in some of the poorest neighborhoods and communities in America
Washington, D.C. –The NMTC Coalition was disappointed that the Republican Tax Framework released by Republican leadership left out the federal New Markets Tax Credit (NMTC) program. The NMTC, a credit with a history of strong bipartisan support, has a proven track record in driving private sector investment to economically distressed rural and urban communities, a point highlighted earlier this week with a public release of data on the impact of the NMTC from the U.S. Department of the Treasury’s CDFI Fund.
“The New Markets Tax Credit began and continues to be a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities—and it has a great track record to boot,” said Robert W. Davenport, President of NMTC Coalition and Special Advisor to National Development Council. “The NMTC has leveraged over $80 billion in total public-private investments, creating more than 750,000 jobs in rural towns and urban neighborhoods struggling with high levels of poverty and unemployment.”
Since its inception, there have been 1,032 New Markets Tax Credit awards, totaling $50.5 billion in allocations, which has spurred an unprecedented level of investment in hard-hit, economically distressed areas. CDFI Fund data shows that more than 72 percent of NMTC investments go to the poorest and most economically distressed rural and urban communities in America, areas with unemployment rates at least 1.5 times the national average or with poverty rates of at least 30 percent. In FY 2016 alone, the CDFI Fund, which operates the program at Treasury, reported that the NMTC delivered $3.16 billion in financing to 530 businesses, community facilities, and economic revitalization projects. Communities put that capital to work, creating nearly 11,000 permanent jobs and almost 27,000 construction jobs in areas with high levels of unemployment and poverty.
The Framework released today includes substantial reductions proposed for corporate and individual taxpayers but fails to include the NMTC despite its record of effectiveness. Concerning business tax credits, which includes the NMTC, the proposal notes:
The framework explicitly preserves business credits in two areas where tax incentives have proven to be effective in promoting policy goals important in the American economy: research and development (R&D) and low-income housing. While the framework envisions repeal of other business credits, the committees may decide to retain some other business credits to the extent budgetary limitations allow.
“The tax reform framework released today certainly doesn’t shut the door on the NMTC, but it is unfortunate that the leadership omitted the NMTC from its list of credits that were essential to preserve—especially in light of the strong bipartisan congressional support for the credit and the incredible track record it has built in some of the poorest, most forgotten communities in our country,” said Bob Rapoza, spokesperson for the NMTC Coalition.
Congress extended the NMTC for five years as part of The PATH Act (P.L. 114-113) in December 2015. In February 2017, Senators Roy Blunt (R-MO) and Ben Cardin (D-MD) introduced legislation in the Senate (S. 384), and Representatives Pat Tiberi (R-OH), Richard Neal (D-MA), and Tom Reed (R-NY) introduced a companion bill the House (H.R. 1098). The legislation provides a permanent authorization for NMTC, increases annual credit authority with inflation adjustments in future years, and exempts NMTC investments from the Alternative Minimum Tax.
“Right now, there are 76 Members of the House and 12 Senators who have signed onto legislation to expand and make the NMTC permanent. We will urge the tax-writing committees to take another look at the NMTC during their final considerations for the tax reform legislation,” Rapoza adds.
For examples of how the NMTC is making an impact in each state, see the NMTC Coalition’s NMTC at Work in Communities report or check out its Project Profile Map. You can also read a letter signed by some 2,000 businesses, nonprofit organizations, banks and community leaders in support of the NMTC that was delivered to the House and Senate tax-writing committees in early February of this year.
FOR IMMEDIATE RELEASE September 27, 2017 Contact: Ayrianne Parks [email protected] (202) 393-5225