The De-Gentrification of New Markets Tax Credits

The thesis of this article is the following: If tax credits are used as part of the solution to urban ills, gentrified projects for the wealthy are not consistent with Congressional intent or wise tax policy. The remedy is to close loopholes in the NMTC act that have allowed problematic use of governmental subsidies, and redirect those funds to ventures that more precisely benefit existing low-income residents who are the object of the NMTC program. Consistent with this thesis, Part 1 provides an overview of the regulatory structure of the tax credit, foundational definitions and intended operational scheme. This is to clarify that the intent of the legislation was to benefit the low-income residents, not wealthy residents who come into low-income areas.

Part II provides a contextual framework for the competing models for how tax subsidies should be delivered to the urban community, i.e. models that allow for gentrified projects and those that do not. Part III contains proposed amendments to the legislation to close loopholes that have diverted funds away from the low-income residents of target communities.