The legislative fight to restore a federal incentive for development in neighborhoods with high poverty rates has moved to the Senate.
The New Market Tax Credit, one of many provisions in the federal tax code that expired at the end of 2013, is another casualty of dysfunction in Congress. Some lawmakers remain hopeful that the program — which encourages investment in low-income, largely urban areas and enjoys bipartisan support — will be extended soon, though there are no immediate signs that it will. Still, that hasn’t stopped some policymakers from trying.
In December, Rep. John Carney (D-Del.) and Rep. Steve Stivers (R-Ohio) introduced legislation that would extend New Markets for thee years, with $6 billion in yearly allocations. Their bill, the Manufacturing Communities Investment Act, has a strict focus on domestic manufacturing: $1 billion of each year’s allotment would be reserved for investments in areas wracked by serious losses in that sector.
From the bill:
The new markets tax credit limitation otherwise determined under paragraph (1) for calendar years 2014, 2015, and 2016 shall each be increased by $1,000,000,000. A qualified community development entity shall be eligible for an allocation under paragraph (2) of the increase described in the preceding sentence only if a significant mission of such entity is providing investments and services to persons in the trade or business of manufacturing products in communities which have suffered major manufacturing job losses or a major manufacturing job loss event, as designated by the Secretary. Paragraph (3) shall be applied separately with respect to the increase provided under this paragraph.
On Wednesday, Sen. Sherrod Brown (D-Ohio) introduced a companion bill in the Senate.
These lawmakers aren’t acting of their own volition. The decree comes straight from the White House, according to the New Market Tax Credit Coalition. In the 2013 and 2014 fiscal year budgets, the Obama administration lobbied for a manufacturing incentive in the mold of the NMTC.
The demand for NMTC allocations has far outpaced the supply. In 2012, there were applications for $21.9 billion credits. The program had a cap of $3.5 billion.
An annual allocation of $1 billion in New Markets for distressed manufacturing towns could go a long way toward sparking investment. The easy examples here are Detroit, Cleveland and Pittsburgh, though NMTCs could also have a direct impact in places Massachusetts, where the leaders of 26 cities — many of them old manufacturing strongholds — have banded together to cooperate on everything from job creation to economic development.
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Bill Bradley is a writer and reporter living in Brooklyn. His work has appeared in Deadspin, GQ, and Vanity Fair, among others.