Expiration Date Approaching for Tax Incentives
Tax incentives for distressed communities, including Empowerment Zones (EZ) and Renewable Communities (RC), are set to expire at the end of the year unless Congress and the White House take steps to extend them. The House Ways and Means Subcommittee on Select Revenue Measures held a Wednesday morning hearing on the topic at which government officials and business owners discussed the program’s merits and suggested improvements.
The most popular incentive is the employment credit of up to $3,000 for each EZ resident that a business employs to work in an empowerment zone. The maximum yearly credit in RC areas is $1,500. Both, said HUD General Deputy Assistant Secretary Nelson Bregon, encourage businesses to employ residents. An EZ bond program provides low-cost financing for businesses where EZ residents comprise at least 35% of their workforce. Bregon would like to see these and other incentives extended to also include distressed rural areas.
“These incentives are very important for low-income distressed communities around the country, and they work particularly in industries like textiles and apparel, where there’s a lot of pressure to go abroad to get low-wage labor in Mexico or South America. They need to be reauthorized for a period that allows for predictability, for potential investors and businesses thinking about expansion,â€ said Rep. Artur Davis (Ala).
Earlier this year, Davis introduced the Empowerment Zone Renewal Community and Enterprise Community Enhancement Act of 2009, which calls for a five-year extension. The White House has requested a one-year extension, but based on testimony at the hearing, Davis believes it is “softeningâ€ on that.
“We came reasonably close to getting it included in the stimulus and I’m hopeful that we’ll get it included in some tax bill this year,â€ he said.