Government introduces a tax credit aimed at community development in poor areas
Wednesday, December 19th 2001, 12:00 am
By: News On 6
WASHINGTON (AP) _ The government aims to generate $15 billion in private investment in low-income communities through a program it began rolling out Wednesday.
As an inducement for such investment, the government will allow taxpayers - including individuals and companies - that put money into a "community development entity'' to be eligible for a new tax credit, the Treasury Department said.
The entities would use the money to support business activities in poor communities.
Treasury officials said the new tax credit may be available to investors by the fall of 2002. The credit to investors is to equal 39 percent of the cost of the investment and be claimed over a 7-year period.
A community development entity, which must be certified by the government, can be any domestic corporation or partnership that has a track record of working with or investing in poor communities. A bank, small business or even citizens group, for example, that meets eligibility requirements could be designated as a community development entity.
The so-called new markets tax credit program was part of a broader, legislative package designed to help distressed communities. That package, which won bipartisan support from Congress, was signed into law last December by President Clinton.
"We believe that this program will attract billions of private sector capital into areas of our country where disinvestments and disenchantment with the economy have too long been the norm,'' said Tony Brown, director of the Treasury Department's Community Development Financial Institutions Fund, which administers the program.