Those who are looking for a great example of how a state can successfully use tax credits to encourage significant economic growth should look at Maine’s New Markets Capital Investment Program. The program functions by attracting investment money to lower income communities. A tax credit is given to individuals and businesses who make equity investments on certain Community Development Entities.
Tax credit programs have long been a great way for federal and state governments to help encourage economic growth. The tax credits create incentives for businesses and individuals to invest in communities or areas where they normally would not have invested in. One of the most direct impact of these types of tax credits is the permanent jobs that they create. When businesses are incentivized to invest in these lower income communities through tax credits, they naturally create jobs, bringing in more tax revenue for the state and helping improve the lives of the people around them.
The new Markets Capital Investment Program in Maine has directly increased the quality of life for many people living in the participating communities. So far, there has been more than $274 million in state and federal New Markets Tax credits. These credits have led to more than 1,700 full time jobs created in the state. Likewise, there has been more than 460 newly created construction jobs due to the tax credits.
As seen in Maine, another great benefit of these innovative tax credit programs is the fact that the jobs created help to diversify and stabilize an economy. This is because these tax credits allow for new businesses to enter a market that they previously would not have been able to. The new jobs offered by new companies help to stabilize the local economy by diversifying the areas of a state’s economic development.
One of the most important aspect of a community’s wellbeing is their economic security and development. The New Markets Tax Credit program that has been implemented in Maine is a great example of how a state can use funding to help ensure the economic well being of their residents. Policymakers should consider all of the great benefits from this program and other similar tax credit programs as they make decisions to help the economic growth and development of their communities.