As Congress debates tax reform, it is important to remember that two of the largest drivers of investments supporting low-income families and distressed communities are the Low Income Housing Tax Credit and the New Markets Tax Credit. These two tax credits generate more than $14 billion of investments annually in affordable housing, small businesses, and manufacturing and community facilities including charter schools, healthcare clinics and child care. They are all in neighborhoods with the least economic opportunity. If these credits were to disappear, the consequences would be felt immediately and could be irreversible. It is unlikely that there would be any kind of substitute for these investments.
- Congress is currently considering a major overhaul of the tax code, with the objective of reducing tax rates to encourage economic growth.
- In this environment, a critical issue will be the future of the two largest drivers of investment into our nation’s most distressed communities: the Low Income Housing Tax Credit (Housing Credit) and the New Markets Tax Credit (NMTC).
- In 2012, the Housing Credit and NMTC together attracted approximately $14 billion in direct investment for capital-starved communities – supporting neighborhoods and projects typically considered too risky or unprofitable for the private market.
- These investments provide families with decent homes, revitalize commercial corridors, build new schools and health centers, and support small business development and job growth – all in neighborhoods with the least economic opportunity.