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GAO: New Markets Tax Credit: Better Controls and Data Are Needed to Ensure Effectiveness

July 1, 2014

Pursuit's Take

The financial structures of New Markets Tax Credit (NMTC) investments have become more complex and less transparent over time. The increased complexity is due, in part, to combining the NMTC with other federal, state, and local government funds. Based on GAO’s survey of Community Development Entities (CDEs) an estimated 62 percent of NMTC projects received other federal, state, or local government assistance from 2010 to 2012. While combining public financing from multiple sources can fund projects that otherwise would not be viable, it also raises questions about whether the subsidies are unnecessarily duplicative because they are receiving funds from multiple federal sources. In recent years, private investors have claimed more than $1 billion in NMTCs annually.

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