New Markets Tax Credits: Billions for Big Buildings and Bigger Corporations

[Donnachaidh]

http://fdlaction.firedoglake.com/2011/02/09/new-markets-tax-credits-billions-for-big-buildings-and-bigger-corporations/

In 2000, Congress approved a program called the New Market Tax Credits with the intent to provide subsidies for development in low income areas–but by gaming the system and using very out-of-date demographic data, huge corporations are getting millions in government money to build high-end hotels and condos. Bloomberg has the story, and I strongly recommend reading article:

Since 2003, some of the world’s biggest financial companies, including Goldman Sachs Group Inc., U.S. Bancorp, JPMorgan Chase and Prudential, have taken advantage of a federal subsidy that will cost taxpayers $10.1 billion — and most of the public has never heard of it.

Investors have used the program, called New Markets Tax Credits, to help build more than 300 upscale projects, including hotels, condominiums, office buildings and a car museum, on streets far from poverty, according to Treasury Department records released through a federal Freedom of Information Act request.

<...>

A total of $7.4 billion of the $16 billion already spent under New Markets, or 46 percent, has gone to tracts with family poverty levels ranging from zero to 19 percent, Treasury and census data show. Those communities include areas of California’s technology-rich Silicon Valley.

More at the link --

[xchrom]

1. our government has become so freaking incompetent. nt

[ThomCat]

2. It would be so damned easy, when they write these bills,

to include some language that penalizes any established and already profitable organization or company that knowingly uses the funding from a government program that is intended for start-ups and not-yet-profitable companies.

Instead of simply handing over the checks, if they were audited, and any company that was already established in other locations, and/or had prior year tax returns showing profits, and/or shows up as a subsidiary entity of an established company, then make them legally liable to return every damn penny of that money plus more on top of it as a penalty for attempting to defraud the government.

This idea that they can simply twist the rules, take the money, and it's totally okay just because they've managed to do it is horrible and mystifying.

Doing something should not mean that it's okay to do it. But that seems to be the rule when deciding what is legal with corporations. "They succeeded in doing it, so it must be okay for them to do it. But if they failed, then we couldn't charge them either because they had not actually succeeded in violating any rule." That is an absolutely dysfunctional and deliberately ineffective way to run any policing organization.

[RedCloud]

3. Just keep throwing money at the wealthy and they will stockpile it.