The New Markets Tax Credit (NMTC) program was established in 2000 to spur private investment in low-income rural communities and urban neighborhoods with limited access to capital. The NMTC is a 39 percent federal tax credit, taken over seven years, on investments made in economically distressed communities. Over the past fourteen years, NMTC has generated more than $55 billion in total investment in low-income communities nationwide; in South Carolina, NMTC has generated over $600 million in total investments.
As a statewide community development lender, the South Carolina Community Loan Fund views the NMTC as a transformative tool in revitalizing communities across South Carolina. Its ability to attract new investments into underserved communities compliments our mission and allows for further economic development by creating jobs and real estate opportunities.
The New Markets Tax Credit Extension Act of 2013 seeks to amend the Internal Revenue Code to 1) make permanent the new markets tax credit; 2) provide for an inflation adjustment to the limitation amount for such credit after 2013; and 3) allow an offset against the alternative minimum tax for such credit. The bill was co-sponsored by seven Senators, including our own Senator Tim Scott of South Carolina.
Economic development leaders across the country support the bill, citing program successes to support the permanency of a program that transforms low-income communities. The New Market Tax Credit Coalition published a report that details the program’s record of achievement and provides arguments in favor of expanding and extending the NMTC as part of tax reform.
Over $55 billion to communities
-More than 50% was invested in communities with unemployment rates more than 1.5 times the national average
-More than 55% was invested in communities where incomes were less than 60% of the area median income
-Nearly 48% was invested in communities where poverty rates exceeded 30%
A cost effective job creation tool that pays for itself
-Businesses financed by NMTC created more than 500,000 jobs (full-time and construction)
A unique and flexible economic development incentive
-NMTC is the only economic development incentive generally available for low-income communities
A proven incentive for private sector investment
-A US Government Accountability Office report indicates that 88% of investors surveyed would not have made the investment without the involvement of the NMTC
Further increases to the efficiency of the NMTC
-Permanent authorization will provide investors and communities more time to plan for new projects to ensure the needs of the community are fully met
A second bill, the Invest in United States Act of 2014, also includes a permanent extension of the NMTC program. Both bills are currently within congressional committee, being discussed and considered before going to the House or Senate as a whole.
We have witnessed first-hand the impact of NMTC investment on South Carolina’s communities through our banking partners Wells Fargo, SunTrust, and TD Bank, and we invite you to lend your voice to this effort by contacting Senator Scott and expressing your support.