Reform should take note of incentives that strengthen distressed areas.
Today, the chairmen of the U.S. Senate and U.S. House tax-writing committees — Sen. Max Baucus, D-Mont., and Rep. Dave Camp, R-Mich. — are kicking off a bipartisan summer road trip to promote progrowth tax reform that simplifies the tax code and encourages policies that work. Their first stop is right here in St. Paul.
Baucus and Camp will be traveling across the country in the coming weeks, meeting with individuals, families, workers and owners of business big and small, seeking feedback on how to improve their experience with our nation’s tax system. For the two chairmen, the goal is to take what they hear — firsthand experiences from across the country — and create a simpler, fairer tax code to boost the economy, create jobs and improve wages.
Given their end goal, it’s fitting that Baucus and Camp will be kicking off their tour at the Baldinger Bakery. Not only is it a 125-year-old, fourth-generation family business, but it’s also a prime example of an effective federal tax program proven to stimulate economic expansion and job creation.
In 2010, Baldinger was looking to expand and upgrade its facility. But like many other established and successful businesses, it was unable to secure the capital needed to finance this expansion. To fill the gap, the St. Paul Port Authority and my organization, the Community Reinvestment Fund, teamed up to provide Baldinger with a $19 million loan using the New Markets Tax Credit — a modest incentive that promotes investment and job creation in some of America’s more economically distressed communities. The loan made it possible for the bakery to construct a new 144,854-square-foot facility — state-of-the-art, energy-efficient and environmentally conscious — on the long-abandoned Griffin Wheelworks brownfields site owned by the Port Authority on St. Paul’s East Side.
The new facility allows Baldinger to continue its tradition of producing unique goods and services in a low-cost production environment. The construction project employed 80 construction workers, and Baldinger provides living-wage jobs to 81 employees in a St. Paul neighborhood where the average family income is less than half the area average and the unemployment rate is nearly twice the national average. Not only did the Baldinger Bakery’s new facility add to the city’s and the Port Authority’s broader revitalization plan for the Phalen Corridor, known as the Beacon Bluff Business Center, but it also supports women-and minority-owned enterprises through the procurement of its raw materials.
For the Community Reinvestment Fund, a nonprofit with a national presence, the New Markets Tax Credit has been an indispensable tool in pursuing our mission to improve the lives of disadvantaged people and strengthen distressed communities through innovative financing. This program has helped us revitalize communities across the country by funding projects that create jobs, provide services and meet local needs. We have used this flexible incentive to provide financing for everything from small businesses to manufacturing centers to nonprofit organizations, including day care facilities, charter schools and community centers.
This credit is unique in that it allows local businesses and leaders to identify priorities and obtain funding that otherwise would not be available.
The Baldinger Bakery story is not uncommon. The New Markets Tax Credit program has leveraged $500 million in private investment to businesses in some of the poorest neighborhoods in the Twin Cities, and more than $55 billion nationwide, creating hundreds of thousands of jobs. As Congress works over the coming months to reform the tax code, much of the focus will be on rooting out wasteful loopholes and tax incentives that have outlived their usefulness. I want to encourage Chairmen Baucus and Camp to recognize and protect tax incentives like the New Markets credit that promote economic growth, strengthen American businesses and create jobs.
Frank Altman is president and CEO of Community Reinvestment Fund, USA.
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