Jay Rockefeller: “I ask my colleague to explain what, if any, impact the codification of economic substance doctrine would have on the new…”

“I ask my colleague to explain what, if any, impact the codification of economic substance doctrine would have on the new markets tax credit. As my colleague knows, the new markets tax credit, NMTC, was signed into law in 2000 and is the largest Federal economic development initiative to be authorized in 15 years. The credit promises to spur some $15 billion in new private sector investment in economic development activity in poor communities throughout the country. The idea behind the credit is that there are good viable business and economic development opportunities in poor communities that lack access to capital. The NMTC is designed to address this capital gap by providing the incentive of a Federal tax credit to individuals or corporations that invest in Community Development Entities, CDEs, working in these communities. While many of the businesses that receive financing through the credit will present good business opportunities, it is possible that some projects, because of their market, will present only limited economic return on top of the credit.”