During a Senate Finance Committee hearing on “Tax Tools for Local Economic Development,” key figures including Committee Chairman Senator Ron Wyden (D-OR), Ranking Member Senator Mike Crapo (R-ID), and Julia Nelmark, President & CEO of Midwest Minnesota Community Development Corporation, highlighted the substantial impact of the New Markets Tax Credit (NMTC). The NMTC was established through the Community Renewal Tax Relief Act of 2000 and has been extended multiple times, now authorized through 2025 under the Taxpayer Certainty and Disaster Tax Relief Act of 2020.
Senator Wyden emphasized the proven effectiveness of the NMTC in driving private investment into low-income communities across all 50 states, supporting projects ranging from healthcare and manufacturing facilities to childcare centers and affordable housing. Nevertheless, Wyden underscored the temporary nature of the NMTC and the need for Congress to make it a permanent fixture to avoid getting lost in upcoming tax code changes.
Ranking Member Crapo echoed these sentiments, noting the tangible benefits of the NMTC and related incentives like opportunity zones and historic tax credits in fostering local economic development. He cited the Desert Sage Health Center in Mountain Home, Idaho, as an example of a project made possible through NMTC investment.
Senator Ben Cardin, a strong advocate for the NMTC, called for its permanency to eliminate the uncertainties faced by developers and investors. Cardin's proposed legislation aims to make the NMTC permanent and expand its value, thereby driving more investment into underserved communities.
Julia Nelmark provided further insights during her testimony, describing the NMTC as one of the most effective tools for community development. She noted that the NMTC has facilitated over $135 billion in financing for more than 8,500 businesses and projects, creating over 1.2 million jobs, and generating significant tax revenue. Nelmark emphasized the program's flexibility in addressing the unique needs of different communities, from healthcare facilities to business incubators.
Despite its success, Nelmark stressed that the NMTC is not yet permanent. She argued that making it permanent, along with adjustments for inflation and Alternative Minimum Tax (AMT) relief, would enhance its effectiveness and support further economic growth in distressed areas. The NMTC has already financed critical community facilities such as health centers, schools, and nursing homes, and has supported significant projects like the redevelopment of the historic Coliseum building in Minneapolis.
The discussion highlighted the NMTC's significant role in stimulating economic growth in underserved areas and the pressing need for Congress to ensure its long-term stability. The program's continuation promises to sustain job creation, enhance community development, and provide vital services in low-income urban neighborhoods and rural communities.
