By Jim Gerlach (PA-6th District)
American taxpayers are reminded every April 15 that our federal tax code has become a gargantuan mess.
It’s a tax code that has resulted in the “easiest” individual return, the 1040-EZ, requiring 40 pages of instruction, which are printed just slightly larger than the baseball box scores in your local newspaper.
No, the U.S. tax code isn’t War and Peace. At nearly 4 million words, the tax code is seven times longer than Leo Tolstoy’s epic novel, considered the measuring stick for extremely lengthy literature.
Because of the length of time since the last major revision of our tax laws in 1986, there is growing bipartisan agreement that we need to downsize the tax code if we want family incomes and American businesses to grow.
My colleagues and I on the House Ways and Means Committee have started the process to accomplish that goal.
In February, Ways and Means Committee Chairman Dave Camp (R-Mich.) released a draft proposal for creating a more streamlined, simpler to understand and more dynamic tax code that unleashes innovation and ingenuity, and encourages investment, hiring and growth.
While it is important to shed many provisions that snuff out opportunity and bury job creators under ream after ream of paperwork, it is also paramount that we preserve portions of the tax code that work and support effective strategies for helping individuals, owners of businesses of all sizes, and communities to thrive.
The New Markets Tax Credit (NMTC) is one critical part of our tax code worth preserving.
Created with bipartisan support in 2000, the NMTC offers anyone willing to invest in economically distressed communities a seven-year, 39-percent federal tax credit.
With the capital raised from the tax credit, community development entities finance loans and investments in business and economic development projects that otherwise might not get off the ground.
The New Markets Tax Credit Coalition reported the incentive led to the creation of 550,000 jobs and spurred $60 billion of investment in businesses located in communities with high poverty and high unemployment since 2000.
According to a Government Accountability Office report, 88 percent of new market tax credit investors surveyed would not have made the investment in low-income communities without the incentive.
And a Treasury Department analysis found that every $1 of foregon tax revenues under the NMTC program leverages about $12 of private investment in distressed communities on a cost basis.
The NMTC is putting people to work and helping transform communities here in southeastern Pennsylvania.
Quaker Maid Meats, Inc., a Berks County business that produces frozen sandwich steaks and other food products, needed capital to expand a few years ago.
Without the NMTC financing that made the expansion possible, Quaker Maid could have joined an all-too-long list of businesses that have moved their operations out of the Greater Reading area in recent years.
However, instead of moving jobs out of the Greater Reading area, Quaker Maid transformed a dilapidated storage warehouse into a new production facility and added 20 jobs.
And in mid-April, the Commonwealth of Pennsylvania announced $5.5 million in New Markets Tax Credit financing would help a Greater Reading area developer convert a shuttered shopping outlet center into a mix of 69 residential units and 40,000 square feet of commercial space.
The Pennsylvania Housing Finance Agency reported that the project would create 55 construction jobs and approximately 80 permanent jobs in the area.
Unfortunately, the future of the NMTC is uncertain. The tax credit expired at the end of 2013.
That’s why I joined my House Ways and Means Committee colleague, Rep. Richard Neal (D-Mass.), in introducing legislation that would make the NMTC permanent.
We have more than a decade of success stories from a variety of businesses in neighborhoods and communities across the country to prove this incentive works and pays for itself.
The legislation I am sponsoring with Neal would ensure we build on that success by providing greater certainty that this tool will always be available to anyone who wants to grow a business, create jobs and reinvigorate communities.
My committee colleagues and I started the process of overhauling our tax code for the first time in 28 years with a few simple goals in mind.
Among those goals are reducing headaches for taxpayers while increasing jobs and opportunity for American workers their families.
We have plenty of evidence to show that the NMTC would help us achieve those goals, and making the tax credit permanent deserves serious consideration as we continue working to make our tax code one that works for all Americans.
Gerlach has represented Pennsylvania’s 6th Congressional District since 2003. He sits on the House Ways and Means Committee.