The New Markets Tax Credit (NMTC) Program survived tax reform passed by Congress yesterday. The NMTC program is safe for now and has continuous funding through 2019. A previous version of the tax legislation had called for the NMTC Program’s elimination, a move that was opposed by a diverse coalition of NMTC providers, banks, and community development organizations. Last month we discussed how all communities would lose if the New Markets Tax Credit (NMTC) was eliminated. The most recent version of the bill, passed by the House and Senate and on its way to the President’s desk, does not include this repeal.
Through the NMTC program, we have funded 22 high-impact community projects through investments totaling $254 million - including such neighborhood pillars as the Ravenswood Family Health Center, Educare, LA Family Housing, and the Boys and Girls Don Fisher Clubhouse. New evidence shows that this important program doesn’t just create jobs – it actually pays for itself.
A new report from the New Markets Tax Credit (NMTC) Coalition demonstrates the benefits of this robustly utilized program.
As is no surprise, this report shows that NMTCs are good for job creation. From 2003 to 2015, NMTC investments generated more than $156 billion in economic activity, creating 1,013,837 jobs in low-income rural and urban communities, including 459,294 temporary construction jobs and 554,545 full-time equivalent jobs, in nearly every industry sector of the economy.
Even more compelling - this Program is better than revenue neutral, meaning that the Federal Government receives more in taxes than it spends on the Program. In 2015, the NMTC generated $15.2 billion in economic activity, including $872 million in federal tax revenue. The annual cost of the program in 2015 was $759 million, providing an annual return of $113 million, or 15 percent.
In other words, the NMTC is a rare example of a program that actually pays for itself - while helping the poorest parts of our country.
Over the years, as the Program has matured, NMTC financing has increasingly gone to rural communities, areas experiencing severe economic distress, for healthcare facilities and manufacturing businesses, as well as other locally driven projects.
Over 2,100 organizations, including hundreds here in California, signed this letter strongly supporting this important Program. These signatories, including community organizations, local governments and others clearly, demonstrate the robust need for a well-funded NMTC Program.
Opportunity Fund is glad that this important program was not cut in the tax legislation. It is and remains a vital tool for community development, poverty alleviation, and job creation in the United States.