The New Markets Tax Credit program's substantial contributions to economic growth across the United States were emphasized during a recent Senate Finance Committee hearing on 'Tax Tools for Local Economic Development.' Committee Chairman Senator Ron Wyden stressed the program's proven effectiveness, stating, 'There's no better example than the New Markets Tax Credit,' while highlighting its flexible approach to attracting private investment into low-income areas. Established in 2000 and extended eight times with consistent bipartisan support, the program's current authorization provides $5 billion in annual allocation authority and is set to expire in 2025.
Julia Nelmark, President & CEO of Midwest Minnesota Community Development Corporation and Vice Chair of the New Markets Tax Credit Coalition, provided expert testimony detailing the program's impact. She emphasized that since its inception, the NMTC has delivered over $135 billion in financing to more than 8,500 businesses and community development projects, creating over 1.2 million jobs at a cost to the federal government of under $20,000 per job. Nelmark also highlighted the program's cost-effectiveness, noting that in 2015, NMTC-generated economic activity resulted in $872 million in federal tax revenue, surpassing the $759 million annual cost of the credits and providing a $113 million return on investment, with additional state and local revenue benefits documented at https://www.cdfifund.gov.
The hearing addressed the potential for making the NMTC program permanent, a move supported by several committee members including Senator Ben Cardin, who has introduced legislation to make the credit permanent and expand its value. Nelmark explained that permanency would reduce costs for Community Development Entities and investors, allowing for better planning and more direct investment in target communities. Ranking Member Senator Mike Crapo cited a specific example from Idaho where NMTC investment facilitated the opening of a new primary care facility in a rural area, underscoring the program's ability to address critical needs in underserved communities.
The program's versatility in supporting various sectors was highlighted, with Nelmark pointing out that it has helped nearly 2,000 manufacturing and industrial businesses expand while financing over 3,700 community facilities including health centers, schools, and daycare centers. As Congress faces upcoming tax deadlines and potential changes to the tax code, the strong bipartisan support for the NMTC program suggests it may be a priority for lawmakers. The hearing's focus on the program's proven track record and widespread impact across urban and rural communities underscores its importance as a tool for equitable economic development, with additional program details available at https://www.newmarketscredits.org.
With the current authorization set to expire in 2025, the testimonies and discussions from this hearing may play a crucial role in shaping the future of the NMTC program. As communities continue to face economic challenges, the potential permanence and expansion of this tax credit could provide much-needed stability and support for ongoing development efforts in America's most underserved areas, benefiting all 50 states through projects including healthcare facilities, manufacturing plants, childcare centers, and affordable housing developments.
