HUD No. 06-107
September 13, 2006
HUD, TREASURY, IRS DETAIL $10 BILLION IN TAX RELIEF FOR BUSINESSES IN GULF
Two-day forum designed to spark huge capital reinvestment in hurricane-affected areas
NEW ORLEANS - Since last year's hurricanes, it became apparent many coastal communities throughout the Gulf needed two things to kick start the region's long-term recovery - housing and jobs. In an effort to encourage capital investment and reinvestment throughout the Gulf Coast, the Department of Housing and Urban Development (HUD), the U.S. Department of the Treasury's Community Development Financial Institutions Fund, the Internal Revenue Service and the Federal Reserve Bank of Atlanta today launched a two-day forum to promote $10 billion in a package of tax incentives designed to stimulate critically needed business activity and job growth.
The multi-agency effort, "Attracting Private Capital Through Reinvestment and New Investment," is intended to make a direct appeal to regional bankers and public officials to tap into billions of dollars in tax relief offered through the Bush Administration's Gulf Opportunity Zone Initiative, New Markets Tax Credit Program and incentives available to businesses located in HUD's Renewal Communities.
"These tax incentives are money in the bank," said HUD Deputy Secretary Roy A. Bernardi. "While the Bush Administration is making an unprecedented investment in the Gulf's long-term recovery, it's clear that any successful strategy will be driven by both government and private capital investment. We need the financial community and public officials at every level to spread the word that these tax incentives will act as a giant magnet to encourage business activity and to grow jobs from the ground up."
Jodey Arrington, Deputy Federal Coordinator for Gulf Coast Rebuilding said, "President Bush is leading an unprecedented commitment to rebuild the Gulf Coast, but the region's continued recovery will only gain momentum with the commitment of the private sector. The government and the generosity of the American taxpayers set the stage, but it's the private sector that will sustain the long-term rebuilding."
Arthur Garcia, director of the Treasury Department's CDFI Fund said, "The New Markets Tax Credit Program is achieving its goal of attracting sources of private capital to our nation's low-income communities and we are glad to be back in the region to encourage the over $1 billion in investments directed to the rebuilding and renewal of the Gulf Coast."
On December 21, 2005, President Bush signed legislation creating The Gulf Opportunity Zone to bring massive tax relief to individuals and businesses in parts of Alabama, Mississippi, Louisiana and Texas. This so-called GO-ZONE, along with existing New Markets Tax Credits and incentives offered through HUD's eight Renewal Communities, is designed to generate tens of billions of dollars in private sector investment in these targeted areas.
"The combination of tax relief provisions and postponement of return filing deadlines will be of great benefit to the taxpayers affected by Hurricane Katrina. The IRS is glad to be able to provide information to assist taxpayers in fully understanding these provisions", said Craig Crews, the IRS Area Manager responsible for coordinating taxpayer education in Louisiana.
Hundreds of bankers and public officials throughout the Gulf are expected to receive a high-level briefing on a menu of tax incentives that can significantly lower the tax grid in the Region, create jobs, and make businesses more profitable in the process. The multi-agency partnership is also appealing to local officials to promote these incentives as a way of generating billions of dollars in additional private capital investment and to fuel their local jobs markets.
The following is a short summary of some of these incentives:
- Bonus depreciation for rebuilding and new construction
- Expanded expensing for small business and investments
- Enhanced tax credits for the construction and rehabilitation of low-income housing
- Increased bond authority to finance public schools
- Doubling scholarship credits to $3,000 per student
- Tax credits up to $1,500 per employee for certain qualified businesses
- Tax credits up to $2,400 for each employee hired from groups experiencing high unemployment
- Increased deductions of up to $35,000 on the purchase of plant and equipment in certain areas
- Total exclusion of the tax on capital gains for certain qualified businesses.
For a more detailed explanation of the tax relief available to all taxpayers in response to Hurricanes Katrina, Rita and Wilma, visit IRS's website (www.irs.gov/pub/irs-pdf/p1460.pdf). For more information about the benefits of the New Markets Tax Credit Program, visit the CDFI Fund's website. To read more details on the tax incentives offered to HUD's Renewal Communities, visit HUD's website.