Organizations Urge Congress to Pass Emergency Expansion of New Markets Tax Credit
More than 700 businesses, investors and organizations call on Congress to extend and expand the community and economic development tax credit assisting communities hardest hit by COVID-19
WASHINGTON, June 24, 2020 – Today, the New Markets Tax Credit (NMTC) Coalition sent a letter addressed to Congressional leadership and Members of the 116th Congress urging them to take action to extend and provide an emergency expansion of the New Markets Tax Credit (NMTC) that will assist communities struggling with high poverty and unemployment due to the coronavirus pandemic – many of which also faced severe challenges in securing capital that pre-dated the pandemic.
The letter comes on the heels of the House proposal to modernize America’s infrastructure, H.R. 2, the Moving Forward Act, which includes a permanent extension and expansion of the New Markets Tax Credit (NMTC) at $5 billion in annual allocation with additional Credits provided over the next three years to help communities combat the economic downturn.
More than 700 signatures came from banks and credit unions; nonprofits such as Habitat for Humanity chapters, YMCAs, Boys & Girls Clubs, food banks and heath care clinics; businesses, ranging from very large businesses to small, family-owned operations; city governments; state and local elected officials and agencies; and associations that represent thousands of members.
Beyond a permanent extension of the NMTC, the letter urges Congress to provide additional emergency NMTC allocations of $3.5 billion phased in over three years. The letter also calls on Congress to take steps to ensure more capital reaches businesses, nonprofits and revitalization projects by expanding the pool of eligible NMTC investors to allow more individuals to participate and by adopting temporary policies that enhance the liquidity of investors.
“Even before the COVID-19 pandemic hit, many of America’s urban neighborhoods and rural communities, struggling with high rates of poverty and unemployment, faced the loss of access to billions of dollars for high-impact, community revitalization projects,” said Bob Rapoza, spokesperson for the NMTC Coalition. “The New Markets Tax Credit provides assistance that no other federal tax incentive can to economically distressed rural and urban communities to promote economic revitalization. The NMTC provisions in HR 2 are a good first step. We urge Congress to take action now to ensure this important incentive is available for community revitalization that is needed now more than ever.”
Established in 2000 in the Community Renewal Tax Relief Act (P.L.106-554), the NMTC is a bipartisan effort to stimulate investment and economic growth in low-income urban neighborhoods and rural communities. The Credit was most recently provided a one-year extension at the close of 2019, as well as a $1.5 billion increase in allocation. The NMTC, which is set to expire at the end of 2020 without congressional action, has an exemplary track record in driving investment to some of the poorest communities in our country, financing over 6,000 businesses, hospitals, daycare facilities and manufacturing expansions and creating more than one million jobs.
The NMTC works by providing a shallow federal tax credit of 39 percent, taken over seven years, for investments made in census tracts where the individual poverty rate is at least 20 percent or where median family income does not exceed 80 percent of the area median. In 2019, more than 80 percent of all NMTC investments were in communities exhibiting severe economic distress with extremely low-incomes, high unemployment, or high poverty.
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.
Contact: Ayrianne Parks