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Private Investment and Public Redevelopment: The Case of New Markets Tax Credits

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  • Richard C. Hula
  • Marty P. Jordan

Abstract

The U.S. federal government has increasingly relied on tax incentives to leverage private investment to spur economic redevelopment in poor communities. One such popular program is the New Markets Tax Credits (NMTC), established by the U.S. Congress in 2000. Community development entities transfer NMTC tax credits to private investors in exchange for equity and capital investments in qualifying projects in low‐income census tracts. Despite its popularity among private financiers and although nearly $40 billion has been allocated for NMTC, little scholarly attention has been paid to the program. We aim to close this information gap by describing the historical context under which NMTC emerged; detailing the practical elements and process of NMTC; and identifying critical, unanswered questions about this evolving relationship between the U.S. federal government and private investors. We use NMTC as a lens to consider the impact of the private sector's surging role in public redevelopment efforts in low‐income communities, and offer some suggestions for governing NMTC and similar partnerships moving forward. 美 国联邦政府已越来越多地依靠税收激励来影响私人投资, 进而刺激贫困社区的经济重建。其中一种普遍的税收激励项目则是“新市场税收抵免”(New Markets Tax Credits, NMTC), 它由美国国会于2000年建立。社区发展实体将NMTC转移到私人投资者手中, 以换取后者在低收入人口普查区的合格项目中实现公平和资本投资。尽管该项目很受私人金融家欢迎, 且已有接近400亿美元拨给了NWTC项目, 但学术界对此的关注还很少。本文致力填补这方面的信息空缺, 通过描述NMTC出现的历史背景, 并详细说明NMTC的实际要素和过程, 同时识别美国联邦政府和私人投资者间不断发展的关系中存在的关键性问题和尚未回答的问题。本文将NMTC作为视角, 考量私人部门在低收入社区公共重建工作中迅速增加的影响力, 同时对治理NMTC及推动类似伙伴关系向前发展提出了建议。 El gobierno federal de los Estados Unidos se ha estado apoyando en los incentivos tributarios para favorecer la inversión privada e impulsar la recuperación económica en comunidades pobres. Uno de estos programas populares es el New Markets Tax Credits (NMTC), establecido por el congreso de los Estados Unidos en 2000. Las entidades de desarrollo comunitario transfieren créditos de impuestos de NMTC a inversionistas privados a cambio de capital e inversiones de capital en proyectos que califican y que están en áreas de bajos ingresos según el censo. A pesar de su popularidad entre financieros privados y a pesar de que cerca de $40 mil millones han sido asignados a NMTC, se le ha dado poca atención académica al programa. Buscamos cerrar esta brecha informativa al describir el contexto histórico bajo el que el NMTC surgió; detallando los elementos prácticos y el proceso del NMTC; e identificando preguntas críticas y sin responder de esta relación en desarrollo entre el gobierno federal y los inversionistas privados. Usamos el NMTC como un lente para considerar el impacto del creciente papel que juega el sector privado en los esfuerzos de recuperación en comunidades de bajos recursos, y ofrecemos algunas sugerencias para gobernar el NMTC y asociaciones similares en el futuro.

Suggested Citation

  • Richard C. Hula & Marty P. Jordan, 2018. "Private Investment and Public Redevelopment: The Case of New Markets Tax Credits," Poverty & Public Policy, John Wiley & Sons, vol. 10(1), pages 11-38, March.
    • Handle: RePEc:wly:povpop:v:10:y:2018:i:1:p:11-38
    DOI: 10.1002/pop4.204
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