But, the truth is that NMTC is an income redistribution scheme to provide more than $1B in credits annually to large banks and investors not to businesses in low-income areas. “Crony socialism” it’s called. Senator Tom Coburn (R-OK.) has exposed it, and the Washington Examiner is reporting it.
Here's how the NMTC scheme works:
- The Department of the Treasury provides funds annually to Community Development Entities (CDEs), which look for investors willing to purchase the tax credits. There are 5,780 CDEs across the country.
- Private investors receive a tax credit in exchange for an investment in the CDE. The CDE then takes the funds and invests them directly in local businesses or projects located in low-income areas. Or, the CDE may use the funds to issue loans to these businesses.
However, the Congressional Research Service believes the NMTC has defined "low-income" communities so broadly that "virtually all of the country's census tracts are potentially eligible for the NMTC." To wit:
- a Starbucks in Indianapolis, Indiana;
- a day spa in Alaska;
- a Milwaukee IHOP;
- four law firms; and,
- a specialty tea shop in Columbus, Ohio.
Now, why ever would the NMTC want such a broad definition? Got any guess?
If those examples aren't enough, consider the Atlanta Aquarium.
Its "Dolphin Tales" exhibit received CDE funding after Wells Fargo and SunTrust Bank purchased tax credits through NMTC. Advocates for the NMTC insist the project created "hundreds" of new jobs. But, the simple fact is that much of the funding went to Hollywood producers and show directors. Worse yet, project supporters have themselves admitted the aquarium could have funded the expansion without CDE financing.
In the end, where's the benefit to low-income Americans?
Can they afford admission to Dolphin Tales at 64.95/ticket?
Yesiree, crony socialism at its best. In the name of assist low-income citizens, the government takes from the 48% of Americans who pay taxes and gives it to the wealthy!
Let the discussion begin…
To read Senator Coburn’s report, click on the following link:
“Banking on the Poor: How Corporate America Exploits Struggling Communities to Collect New Markets Tax Credits.”
To read the Washington Examiner article, click on the following link:
“Why a program for the poor may be helping big banks instead.”