Legislation reintroduced on Wednesday would make a tax incentive designed to spur private investment in lower-income neighborhoods permanent.
Reps. Jim Gerlach (R-Pa.) and Richard Neal (D-Mass.), both members of the House Ways and Means Committee, unveiled the bipartisan New Markets Tax Credit Extension Act on Wednesday.
The new markets tax credit, which is credited with creating more than 550,000 jobs and incentivizing more than $60 billion in private investment to improve low-income communities since 2000, expired at the end of 2013.
The legislation that was reintroduced on Wednesday would make the tax credit permanent.
“We have more than a decade of success stories from a variety of businesses in neighborhoods and communities across the country to prove this incentive works and pays for itself,” Gerlach said. “We can build on that success by providing greater certainty that this tool will always be available to anyone who wants to build a business, create jobs and reinvigorate communities. Rep. Neal has been a critical ally in building bipartisan support for this legislation, and I look forward to working with him and our colleagues in the House to send this bill to the president’s desk.”
The new markets tax credit offers those who invest in economically distressed communities a seven-year, 39 percent federal tax credit. Community development entities then use capital raised from the tax credit to finance loans and investments in business and development projects.
“This is a federal program that works – spurring investment that grows local economies and generates jobs in the most distressed communities across the nation,” Neal said. “However, barring congressional action, this key initiative will end. That is why I am proud to introduce legislation with Rep. Gerlach to make the new markets tax credit permanent and ensure another decade of critical investments reach western Massachusetts.”
Every $1 in foregone tax revenues under the program leveraged about $12 in private investment in distressed communities on a cost basis, according to the Treasury Department analysis.