Boustany Reflects on NMTC’s Benefits and Prospects for Permanency in the Context of Tax Reform

Published by Michael Novogradac on Thursday, October 27, 2016 - 12:00am

On Oct. 20, Rep. Charles Boustany, R-La., spoke to attendees of the Novogradac 2016 New Markets Tax Credit Fall Conference in New Orleans, La. Among many other topics, he shared his perspective on questions that should be considered during the tax reform process as lawmakers consider which deductions and credits to revise or eliminate.

“What’s the purpose of a credit? What does it achieve? How broad is the impact? What does it do to grow the economy? And when we look at that economic growth, how deep does it go? That’s where the value of the new markets tax credit, historic tax credit and low-income housing tax credit come in,” Boustany said. “Because it does grow the economy and it grows it with very deep roots … it’s not a superficial growth. It doesn’t benefit just some on the top, it helps every community.”

Disaster Relief Package Based on Lessons Learned
In addition to noting that the Ways and Means Committee’s top priority remains to be tax reform, Rep. Boustany touched briefly on the lesson learned from Hurricane Katrina: that a tax component is necessary to spur redevelopment and recovery after major disasters. He credited the rebuilding of New Orleans since 2005 in part to historic tax credit (HTC), new markets tax credit (NMTC) and the low-income housing tax credit (LIHTC), and noted that he had introduced the Louisiana Flood and Storm Devastation Tax Relief Act of 2016 on Sept. 22. The bill would provide additional LIHTC and NMTC allocation authority for recovery in areas affected by floods in August.

Reflections on the PATH Act  
Rep. Boustany also spoke about his role as chairman of the tax policy subcommittee during the passage of that PATH Act, which extended the NMTC for five years. During his remarks he said, “We pushed hard to get more permanency,” noting how previous one-year extensions, often being retroactive, created significant uncertainty for the NMTC community. Rep. Boustany reflected on working on the PATH Act with another champion for the NMTC, Rep. Pat Tiberi, R-Ohio. “We wanted to do what we could to make this permanent. We fell a little short of that but we got five years. Five years to give you some degree of certainty with regard to investment,”  he said.

Importance of Development Tax Credits’ Tangible Benefits
He noted the consequence of the measurable benefits created by the NMTC, HTC and LIHTC in the context of creating and implementing policy. “It’s rare, in my mind, that you can come up with policy in Washington and actually see the benefits immediately. Oftentimes there’s this big disconnect; you do this grand policy and you think ‘Oh, this is wonderful, it’s going to change things.’ And then you don’t see much of an impact,” Boustany said. “Well, the combination of new markets tax credits with historic tax credits, low-income housing tax credits you actually,  as a policymaker, see the real impact of this. I mean, I’ve been all over New Orleans and seen the development projects.”

He continued, describing the tax credits’ potential for the nation as a whole. “But not only that, think about the rural communities. Rural communities across this country that have old, historic properties that are ripe for development,” Boustany said. “How are we going to see a renewal, a revitalization of the American economy unless we do that kind of investment? … This is a form of infrastructure development that links up with the human capital that helps bring our economy forward. That’s why it’s so important. And, we get to see the immediate impact.”  

Advocacy Key to Future of the NMTC
During his keynote address, Rep. Boustany noted that there is a lot of bipartisan support for the NMTC, and a lot of bipartisan support for making it permanent. However, he indicated uncertainty looms large.

“The pathway to what happens beyond 2019 remains a little unclear today,” Boustany said. “Obviously the drive is to do tax reform. And how ambitious tax reform becomes … I don’t know what the answers are yet … I encourage you to weigh in. Weigh in with your members of Congress and senators that you know to continue to press how important this is and how important it should be to be included in any new tax package that we put out there … it’s vital, really vital that you give us the input as we start to fill in the legislative details.”

Rep. Boustany closed his remarks by saying “I am committed to keeping these tax credits in place. Period. I think they’re vital. And so I look forward to partnering with all of you as we make that a reality.”

Hear all of Rep. Boustany’s keynote address here.