New Markets Tax Credit Coalition Commends Extension of New Markets Tax Credit in American Taxpayer Relief Act
WASHINGTON, Jan. 7, 2013 /PRNewswire-USNewswire/ -- The New Markets Tax Credit Coalition applauds the passage of legislation extending the New Markets Tax Credit (NMTC) for two years. By extending the NMTC, Congress ensures the continued delivery of billions in capital to businesses and revitalization projects in low income communities.
"The NMTC has shown that – at a modest cost to the federal government – it generates meaningful economic growth and job creation in economically distressed urban and rural communities throughout the country," explained Jose Villalobos, New Markets Tax Credit Coalition Board of Directors Chairman and TELACU Senior Vice President. "I commend Congress for ensuring that private sector investment in these communities will continue."
Passed by Congress on Tuesday, The American Taxpayer Relief Act of 2012 (H.R. 8) includes a provision extending the NMTC through 2013. This will allow the Department of Treasury to make two more rounds of NMTC allocation awards, providing $7 billion in NMTC allocation authority at a ten-year cost of $1.8 billion in foregone federal revenue. If history is any guide, this $1.8 billion in federal investment will leverage more than $14 billion in total investment in rural and urban areas struggling with high rates of unemployment and poverty, creating over 100,000 jobs.
The NMTC was enacted in 2000 in an effort to spur private investment and economic growth in communities with poverty rates of at least 20% or median incomes at or below 80% of the area median by offering a modest incentive on investments made there.
Between 2003 and 2010, NMTC investments were responsible for creating over 500,000 jobs and generating over $5.3 billion in federal tax revenue and over $3 billion in state and local taxes, according to a report released last month on the NMTC's aggregate economic impact. Federal tax revenue generated by NMTC investments more than covers the cost of the program, as measured in terms of revenue lost by the federal government, providing a significant return on investment to the federal government.
Since being enacted, the NMTC has generated billions of dollars in private investments in projects and communities that likely would never have received such injections of patient capital otherwise. According to a U.S. Government Accountability Office (GAO) survey, 88 percent of NMTC investors would not have made their investments if not for the incentive of the Credit.
SOURCE New Markets Tax Credit Coalition