IDEAS home Printed from https://ideas.repec.org/a/wly/povpop/v10y2018i1p11-38.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://doi.org/10.1002/pop4.204
    Download Restriction: no
    File URL: https://libkey.io/10.1002/pop4.204?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Timothy Bates, 2000. "Financing the Development of Urban Minority Communities: Lessons of History," Economic Development Quarterly, , vol. 14(3), pages 227-242, August.
    2. Rich, Michael J., 1989. "Distributive Politics and the Allocation of Federal Grants," American Political Science Review, Cambridge University Press, vol. 83(1), pages 193-213, March.
    3. Peter S. Fisher & Alan H. Peters, 1998. "Industrial Incentives: Competition among American Cities and States," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number ii.
    4. L. Owen Kirkpatrick, 2007. "The Two “Logics†of Community Development: Neighborhoods, Markets, and Community Development Corporations," Politics & Society, , vol. 35(2), pages 329-359, June.
    5. Freedman, Matthew, 2012. "Teaching new markets old tricks: The effects of subsidized investment on low-income neighborhoods," Journal of Public Economics, Elsevier, vol. 96(11), pages 1000-1014.
    6. Graeme A. Hodge & Carsten Greve & Anthony E. Boardman (ed.), 2010. "International Handbook on Public–Private Partnerships," Books, Edward Elgar Publishing, number 13451, March.
    7. Sherrill Shaffer & Robert N. Collender, 2009. "Federal Credit Programs and Local Economic Performance," Economic Development Quarterly, , vol. 23(1), pages 28-43, February.
    8. Harold (Hal) Wolman & Diana Hincapie, 2015. "Clusters and Cluster-Based Development Policy," Economic Development Quarterly, , vol. 29(2), pages 135-149, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alan Sage & Mike Langen & Alex van de Minne, 2023. "Where is the opportunity in opportunity zones?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(2), pages 338-371, March.
    2. Manon Garrouste & Miren Lafourcade, 2022. "Place-Based Policies: Opportunity for Deprived Schools or Zone-and-Shame Effect?," Post-Print hal-04329793, HAL.
    3. Linda Lobao & P. Wilner Jeanty & Mark Partridge & David Kraybill, 2012. "Poverty and Place across the United States," International Regional Science Review, , vol. 35(2), pages 158-187, April.
    4. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2015. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 88-124, May.
    5. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, August.
    6. Jia Wang & Weici Yuan & Cynthia Rogers, 2020. "Economic Development Incentives: What Can We Learn From Policy Regime Changes?," Economic Development Quarterly, , vol. 34(2), pages 116-125, May.
    7. Chirinko, Robert S. & Wilson, Daniel J., 2008. "State investment tax incentives: A zero-sum game?," Journal of Public Economics, Elsevier, vol. 92(12), pages 2362-2384, December.
    8. Timothy Bates, 2002. "Rejoinder to Charles D. Tansey: Moving Toward a More Effective Small Business Administration," Economic Development Quarterly, , vol. 16(2), pages 185-190, May.
    9. David Neumark, 2020. "Place‐Based Policies: Can We Do Better Than Enterprise Zones?," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 39(3), pages 836-844, June.
    10. Wenhua Di & Daniel L. Millimet, 2017. "Targeted business incentives and the debt behavior of households," Empirical Economics, Springer, vol. 52(3), pages 1115-1142, May.
    11. Rodrigues, Lúcia Lima & Craig, Russell, 2018. "The role of government accounting and taxation in the institutionalization of slavery in Brazil," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 57(C), pages 21-38.
    12. Mitchell, Matt & Farren, Michael & Gonzalez, Olivia & Horpedahl, Jeremy, 2019. "The Economics of a Targeted Economic Development Subsidy," Annals of Computational Economics, George Mason University, Mercatus Center, November.
    13. Paul Osterman, 2006. "Community Organizing and Employee Representation," British Journal of Industrial Relations, London School of Economics, vol. 44(4), pages 629-649, December.
    14. Carlianne Patrick, 2014. "Does Increasing Available Non-Tax Economic Development Incentives Result in More Jobs?," National Tax Journal, National Tax Association;National Tax Journal, vol. 67(2), pages 351-386, June.
    15. Novak, David C. & Koliba, Chris & Zia, Asim & Tucker, Matt, 2015. "Evaluating the outcomes associated with an innovative change in a state-level transportation project prioritization process: A case study of Vermont," Transport Policy, Elsevier, vol. 42(C), pages 130-143.
    16. Giulia Faggio & Teresa Schlüter & Philipp vom Berge, 2018. "Interaction of Public and Private Employment: Evidence from a German Government Move," SERC Discussion Papers 0229, Centre for Economic Performance, LSE.
    17. Daniele Bondonio, 2003. "Do Tax Incentives Affect Local Economic Growth? What Mean Impacts Miss in the Analysis of Enterprise Zone Policies," Working Papers 03-17, Center for Economic Studies, U.S. Census Bureau.
    18. A. Abigail Payne, 2003. "The Effects of Congressional Appropriation Committee Membership on the Distribution of Federal Research Funding to Universities," Economic Inquiry, Western Economic Association International, vol. 41(2), pages 325-345, April.
    19. Miren Lafourcade & Florian Mayneris, 2017. "En Finir avec les ghettos urbains ?," PSE-Ecole d'économie de Paris (Postprint) halshs-01884340, HAL.
    20. Sungur Onur, 2019. "Spatial Distribution of Investment Incentives and the Impact of New Incentive System for Less Developed Regions in Turkey," Review of Economic Perspectives, Sciendo, vol. 19(1), pages 25-48, March.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:povpop:v:10:y:2018:i:1:p:11-38. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://doi.org/10.1002/(ISSN)1944-2858 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.