Bipartisan Tiberi bill would protect local and state investment in needy communities

U.S. Reps. Pat Tiberi (R-OH) and Peter Roskam (R-IL) introduced legislation on Tuesday that would protect the ability of local and state governments to invest in needy communities by modifying policy which amounts to double tax on community investments.

The Preserving Investment in Needy Neighborhoods (PINN) Act, H.R. 5539, which was introduced by Tiberi, Roskam and U.S. Rep. Danny Davis (D-IL), would amend the federal tax code to allow income tax exemptions on capital contributions from state and local governments to partnerships and limited liability companies taxed as partnerships.

“The PINN Act will ensure that partnerships, including small and locally owned businesses, are treated fairly, and that they have stronger incentives to work with local and state governments to boost private sector investment in neighborhoods that need it most,” Tiberi said. “It is a commonsense fix and a smart pro-growth solution to help our communities grow and thrive.” 

Local and state investments that are geared to spur economic development and private investment in communities have been treated as a tax-free “contribution to capital” since 1925.

Codification of the rule, however, did not specifically list “partnerships” in the federal law because they were not widely used in the 1920s. The PINN Act would amend the federal code to specifically include partnerships and LLCs that operate as partnerships.

“The current policy amounts to a double tax on community investment,” Betsy Laird, the vice president of global public policy at the International Council of Shopping Centers, said. “It impedes development in cities and towns and the vibrant retail opportunities that come along with strong public-private partnerships. We thank Congressman Tiberi, Congressman Roskam, and Congressman Davis for their leadership in encouraging investment in our underserved communities and for spearheading this important legislation.”