Community development tax incentives play a crucial role in advancing societal goals while promoting economic growth. As Congress prepares to consider a major tax bill to extend provisions of the Tax Cuts and Jobs Act, the continuation and expansion of these incentives should be a foundational aspect of the legislation, especially in light of concerns regarding the national debt-to-GDP ratio.
A June 2024 Congressional Budget Office report projected that national debt could rise to 99% of U.S. GDP in 2024 and 122% by 2034. Many House Republicans have highlighted the need to avoid adding significantly to the deficit during tax discussions. One approach to mitigating this is to assess tax provisions based on their impact on GDP.
Community development stakeholders have reason to be optimistic, as extending and modernizing incentives such as the housing tax credit (HTC), new markets tax credit (NMTC), historic tax credit (HTC), opportunity zones (OZ), and various clean energy tax incentives can stimulate economic growth. These incentives should be considered beneficial for simplifying the passage of a significant tax bill and can contribute positively to the national debt-to-GDP ratio.