According to a report from Senator Tom Coburn, a Republican out of Oklahoma, New Markets Tax Credits (NMTC) are being abused by major banks, fast food chains, and other wealthy investors to put millions of extra dollars in their pockets. The program was intended to support and develop new markets in areas that are struggling to stay afloat. However, companies and wealthy taxpayers are taking advantage of the private financing available through the program intended for struggling communities to build Starbucks, private car museums, and other projects, which don’t necessarily help areas in need. Part of the issue lies with the definition of “qualified low-income communities” outlined within the NMTC eligibility making the majority of the communities in the United States eligible. Coburn claims the NMTC allows private investors and big banks including: Chase, Bank of America, Wells Fargo, and others to claim more than $1 billion in NMTC per year.
A separate report from the Government Accountability Office (GAO) was also critical of the NMTC program, especially, on the funding side of things. They found that the majority of NMTC-financed projects used more than one source of public funding, but the purpose of the program is to utilize private investments. More specifically, in 2010, the GAO determined that 62% of NMTC projects received other public funding. The NMTC has assisted wealthy investors fund close to 4,000 projects.
On the other end of the spectrum, a spokesperson for a business group that lobbies for the credit, had some positive statistics on the program. He stated that the NMTC program has delivered over $60 billion to businesses and revitalization projects in some of the poorest areas in the country. From these investments, over 550,000 jobs have been generated. He also mentioned that the flexibility of the program is one of its strong points, which allows funding of a variety of important projects.
The program sounds like it might need some fine-tuning, but provides positive and negative results in the meantime. Feel free to read more here –
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