By Congressman Pat Tiberi
August 28, 2016
During the Republican National Convention, the spotlight was on Cleveland. As a city that has seen more than its share of the impacts of the Great Recession and job loss, its dramatic revitalization over the past decade was on full display. Cleveland is a prime example of what we need to do to reboot our nation’s economy and bring more Americans back into the workforce.
Under the current administration, Americans have felt the stress of a slow and anemic recovery. As eight long years have shown, the federal government cannot spend its way out of this slump. We need a better way — a way that engages the private sector, incentivizes investment and unlocks economic potential to create jobs and boost opportunity.
That is why, as a member of the House Ways and Means Committee, I have long championed tools and solutions like the New Markets Tax Credit (NMTC), a cost-effective incentive that encourages public-private partnerships to invest in struggling rural and urban areas where access to capital is often most limited.
How does it work? The credit attracts capital to distressed areas by providing private investors with a cumulative 39 percent credit, taken over seven years, against federal income taxes. Using the capital raised, community development entities then finance loans and investments in vital economic development projects.
The credit is also used to provide financing for hospitals in medically underserved areas.
Nationwide, I believe the NMTC is the remedy needed to spur more investments and real growth. How do I know? Because, it has worked in Ohio.
Between 2003 and 2013, Ohio received $1.82 billion in NMTC investments, leveraging an additional $1.76 billion from other sources, totaling $3.58 billion in total project investments. This investment benefited 358 businesses and created nearly 43,000 jobs, including both construction and full-time positions.
In Toledo, the NMTC financed the Ironville Terminal, which facilitates loading and moving dry bulk materials among trains, trucks and ships. In Nelsonville, the NMTC financed Quickloadz, a manufacturer of a trailer system allowing trucks to transport sea-shipping containers in a more efficient way. And in Cincinnati, the once blighted Over-the-Rhine neighborhood has been dramatically transformed by the flexible capital the NMTC provides.
The credit is also used to provide financing for hospitals in medically underserved areas, schools, day care centers, grocery stores and other vital facilities. From funding a recreation and aquatic center in Muskingum County in my congressional district, to financing a new grocery store in an underserved area in Columbus, the NMTC is breathing new life into our communities.
The NMTC has also had a remarkable impact in Cleveland. CDFI Fund data for the NMTC indicates $1.6 billion in total project financing has been generated, assisting 78 businesses in securing capital. The cost to the federal government: $175 million — a fraction of the total capital it incentivized. Other examples include the Urban Community School, which serves mostly low-income children, and a Ronald McDonald House, which provides low-cost support services to families who need pediatric care.
Unfortunately today, the NMTC, which has created more than 750,000 jobs nationwide, is not a permanent part of the tax code — creating an uncertain future for communities looking for a path to economic recovery and stability. While we took an important step by providing a five-year authorization in December, making the NMTC permanent would go a long way in helping our capital-starved communities, with new possibilities for workers and job creators who serve as the backbone of a vibrant economy. That is why I introduced a bill to do just that and ensure the NMTC is a financial tool communities can count on.
In this election season, with all eyes on Ohio, we have an opportunity to showcase how we can achieve robust growth nationwide with private-sector solutions like the NMTC. The American people are looking for solutions that will provide tangible, real and proven results. Let’s get to work to get the job done for our businesses, a better economy and ultimately, a stronger nation.
U.S. Rep. Pat Tiberi of suburban Columbus represents Ohio’s 12th Congressional District. A Republican, he is a senior member of the House Ways and Means Committee.
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