THE WHITE HOUSE
Office of the Vice President
ADMINISTRATION'S TAX CUT PROPOSAL DELIVERS BIG FOR CITIES AND COUNTIES
Today, Vice President Gore, along with a group of America's mayors and county officials, urged the Congress to adopt the major urban initiatives in the Administration's new tax cut proposal. These initiatives promote community development where it is most needed. They also are true to the spirit of the balanced budget agreement reached between the Congressional leadership and the Administration, while the House and Senate alternatives fall short.
The Clinton-Gore Administration's new tax cut proposal includes four major initiatives to help America's urban areas:
PRESIDENT CLINTON'S TAX CUT PROPOSAL GOES FARTHER FOR AMERICA'S URBAN AREAS THAN THE ALTERNATIVES. In the balanced budget agreement, the President and the Congressional leadership pledged to seek enactment of three tax initiatives from the Administration's FY 1998 budget which are critical to America's urban areas: a Brownfields tax incentive; new Empowerment Zones and Enterprise Communities (EZ/EC); and a special welfare-to-work tax credit.
Key Urban Initiatives Clinton Tax Plan House Tax Plan Senate Tax Plan
Brownfields X *
Welfare-to-Work Credit X X**
CDFI Tax Credit X
PRESIDENT CLINTON'S NEW TAX CUT PLAN HELPS TO CLEAN UP AND REDEVELOP BROWNFIELDS. The Brownfields tax incentive included in the President's tax cut proposal would reduce the cost of cleaning up thousands of contaminated, abandoned sites in economically distressed areas by permitting clean-up costs to be immediately deducted for tax purposes, rather than requiring this spending to be written off over time. This would, in turn, encourage redevelopment of these areas. The Treasury Department estimates that this $2 billion tax incentive will, over seven years, leverage more than $10 billion for private sector cleanups nationwide, allowing redevelopment of 30,000 brownfields.
THE PRESIDENT'S TAX CUT PLAN CREATES NEW EMPOWERMENT ZONES AND ENTERPRISE COMMUNITIES. Under the President's 1993 Empowerment Zones and Enterprise Communities initiative, participating communities develop a strategic plan to spur economic development, and they receive Federal tax benefits, social service grants and flexibility in use of Federal funds in order to put these plans into effect. The EZs and ECs are urban or rural areas with high poverty and unemployment rates.
THE PRESIDENT'S PLAN INCLUDES A SPECIAL WELFARE-TO-WORK TAX CREDIT. This provision gives employers an added incentive to hire long-term welfare recipients by providing a credit of 50% of the first $10,000 in annual wages paid to new hires who have received welfare for an extended period. The credit can be claimed for two years per worker, to encourage not only hiring but retention. Although the Congressional leadership pledged to seek a credit along these lines, the House bill includes only a scaled-back version, and the Senate bill omits it entirely.
THE PLAN ALSO PROVIDES FOR A NEW COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS TAX CREDIT. The President's CDFI Fund is helping to build a national network of community development financial institutions -- community development banks, venture capital funds, and credit unions -- by providing financial and technical assistance to these entities. CDFI dollars are creating jobs, rebuilding neighborhoods and restoring hope in communities from San Francisco to Boston, Louisville to Chicago.