June 24, 2019

House Ways and Means Committee Approves One-Year New Markets Tax Credit Extension and Expansion

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On June 18, the House Ways and Means Committee marked-up and passed four bills, including H.R. 3301, The Taxpayer Certainty and Disaster Tax Relief Act of 2019, which would extend the New Markets Tax Credit (NMTC) through the end of 2020 and provide an increase in allocation authority from $3.5 billion to $5 billion in 2020. The NMTC is currently set to expire at the end of 2019. 

In addition to the proposed NMTC extension and expansion, the Taxpayer Certainty and Disaster Tax Relief Act of 2019, introduced by Representative Mike Thompson (D-CA-05), would provide a temporary increase in Low-Income Housing Tax Credit authority for 2017 and 2018 disaster areas in California. 

This bill was advanced by Committee Chairman Richard Neal (D-MA) as a tax credits package alongside the Economic Mobility Act of 2019 (H.R. 3300), the Child Care Quality and Access Act of 2019 (H.R. 3298), and the Promoting respect for Individuals’ Dignity and Equality Act (PRIDE) Act (H.R. 3299). The Child Care Quality and Access Act of 2019, which passed by a vote of 22-18, would increase entitlement funding for child care for the fiscal years 2020 and 2021. The Promoting Respect for Individuals’ Dignity and Equality (PRIDE) Act of 2019 would update the language of the Internal Revenue Code to address certain gender-specific references. It would also allow same-sex couples to adjust certain prior-year federal tax filings to reflect the date their marriages were recognized. The fourth bill included in the tax credit package, the Economic Mobility Act of 2019, would strengthen the Earned Income Tax Credit (EITC) for individuals with no qualifying children and passed by a vote of 22-19.

In his opening statement at the Committee mark-up, Chairman Neal expressed strong support for expansion of the NMTC as part of H.R. 3301, noting he has long been a champion for the NMTC. His support was echoed by a number of Committee members, such as Rep. Teri Sewell (D-AL-7) who highlighted its bipartisan support and widespread impact. “The NMTC has proven to be successful in spurring private investment in underserved rural and urban communities that have trouble attracting capital. This historic bipartisan tax incentive helps finance business expansion, health centers, daycare centers and facilities, and other revitalization projects in my district and across this nation,” said Rep. Sewell. 

Concerns were raised about long-term implications for the deficit if all of the extensions were made permanent. Ultimately, the Committee approved H.R. 3301 on a party line vote 25-17 near the end of a more than seven-hour markup session. The Committee also passed the other three bills, which now await consideration by the full House. One potential vehicle for this tax legislation would be attaching it to a must-pass measure to raise the debt limit that will surface later this year.

Enterprise continues to advocate for the permanent extension of the NMTC. On the Senate side, the Senate Finance Committee’s Employment & Community Development Task Force is considering the NMTC as part of its examination of expiring or expired tax provisions. Enterprise submitted comments to the Task Force calling for the permanent extension of NMTCs. On June 28, Enterprise Managing Director Chimeka Gladney shared a brief presentation on the effectiveness of NMTCs to the Task Force, alongside other NMTC partners and stakeholders. 

The New Markets Tax Credit Extension Act of 2019 continues to gain bipartisan support. At the time of this post, S.750 has 23 co-sponsors and H.R.1680 has 82 co-sponsors. 
 
 

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