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JCT Estimates Budget Effects of Community Renewal/New Markets Act

JUL. 25, 2000

JCX-86-00

DATED JUL. 25, 2000
DOCUMENT ATTRIBUTES
Citations: JCX-86-00

 

=============== SUMMARY ===============

 

The Joint Committee on Taxation has estimated (JCX-86-00) the revenue effects of H.R. 4923, the Community Renewal and New Markets Act of 2000, passed in the House on July 25. The bill would increase tax incentives for investment in "areas of pervasive poverty, high unemployment, and general economic distress" at an estimated cost of $5.8 billion over five years. (For related coverage, see Doc 2000- 19959 (3 original pages), 2000 TNT 143-2 Database 'Tax Notes Today 2000', View '(Number', or H&D, July 25, 2000, p. 761.)

Renewal community provisions to provide a capital gains exclusion, a wage credit to employers, a deduction for building revitalization, additional section 179 expensing for renewal property, expensing for environmental remediation, and expansion of the Work Opportunity Tax Credit within renewal communities would cost an estimated $2.4 billion over five years.

Expansion of empowerment zone incentives would carry a price tag of $1.7 billion.

 

=============== FULL TEXT ===============

 

                     JOINT COMMITTEE ON TAXATION

 

                            July 25, 2000

 

 

                              JCX-86-00

 

 

               ESTIMATED REVENUE EFFECTS OF H.R. 4923,

 

         THE "COMMUNITY RENEWAL AND NEW MARKETS ACT OF 2000"

 

 

                      Fiscal Years 2001 - 2005

 

 

                        [Millions of Dollars]

 

_____________________________________________________________________

 

Provision

 

[Effective]                 2001   2002   2003   2004   2005  2001-05

 

_____________________________________________________________________

 

1. Designate 40 renewal

 

communities, 8 of which

 

are in rural areas, to

 

receive the following tax

 

benefits: 0% capital

 

gains tax rate on quali-

 

fying assets held more

 

than 5 years; deduction

 

for qualified revitali-

 

zation expenditures,

 

capped at $6 million per

 

community in 2001 and

 

$12 million thereafter;

 

an additional $35,000 of

 

section 179 expensing;

 

expensing of qualifying

 

environmental remediation

 

costs; a wage credit of

 

15% on first $10,000 of

 

qualified wages

 

[DOE /1/]                    -75   -545   -576   -578    -606  -2,380

 

 

2. Provide new markets

 

tax credit with allocation

 

authority of $1.0 billion

 

in 2001, $1.5 billion in

 

2002 and 2003, $2.0

 

billion in 2004 and 2005,

 

and $3.5 billion in 2006

 

and 2007

 

[ima 12/31/00]                -2    -18   -115   -246    -365    -747

 

 

3. Designate 9 new empower-

 

ment zones, extend present-

 

law empowerment zone desig-

 

nations through 12/31/09,

 

expand the 20% wage credit

 

to all empowerment zones,

 

increase the additional

 

section 179 expensing to

 

$35,000 for all

 

empowerment zones including

 

D.C. in 2002, and extend

 

the more favorable round

 

II tax exempt financing

 

rules to all existing and

 

new empowerment zones

 

excluding D.C.

 

[DOE /2]/]                   ---   -246   -476   -474    -541  -1,737

 

 

4. Capital gain rollover

 

of empowerment zone assets

 

and increased exclusion

 

of gain on sale of certain

 

empowerment zone

 

investments

 

[ima DOE]                    3     -3    -15    -32     -52    -102

 

 

5. Improvements in the

 

Low-Income Housing Credit

 

-- increase per capita

 

credit to $1.35 in 2001,

 

$1.45 in 2002, $1.55 in

 

2003, $1.65 in 2004, $1.70

 

in 2005, $1.75 in 2006,

 

and indexed for inflation

 

thereafter; $2 million

 

small State minimum

 

beginning in 2001 and

 

indexed for inflation

 

beginning in 2007; modify

 

stacking rules and credit

 

allocation rules; certain

 

Native American housing

 

assistance disregarded

 

in determining whether

 

building is Federally

 

subsidized for purposes

 

of the low-income

 

housing credit

 

[tyba 12/31/00]               -4    -24    -68   -140    -239    -475

 

 

6. Accelerate 5-year

 

phasein of private

 

activity bond volume

 

cap

 

[cyba 12/31/00]              -10    -39    -80   -122    -155    -406

 

_____________________________________________________________________

 

NET TOTAL                    -91   -875 -1,330 -1,592  -1,958  -5,847

 

_____________________________________________________________________

 

Joint Committee on Taxation

 

 

NOTE:  Details may not add to totals due to rounding.

 

 

Legend for "Effective" column:

 

cyba = calendar years beginning after

 

DOE = date of enactment

 

 

ima = investments made after

 

tyba = taxable years beginning after

 

 

                              FOOTNOTES

 

 

     1 The Secretary of Housing and Urban Development must

 

prescribe regulations for the nomination process no later than 4

 

months after the date of enactment. The tax benefits for the

 

designated communities generally are effective beginning on 7/1/01,

 

and terminating on 12/31/09.

 

 

     2 Area may be designated as an empowerment zone any time after

 

the date of enactment and before 1/1/02. The tax benefits generally

 

become effective after 12/31/01 and terminate on 12/31/09.

 

 

     3 Loss of less than $500,000.

 

 

                          END OF FOOTNOTES
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