Bill Overview
Title: Community Development Investment Tax Credit Act of 2022
Description: This bill allows a new tax credit for investment in Community Development Financial Institutions (CDFIs) to benefit underserved communities. The credit amount is a specified percentage of investment in a CDFI during successive ten year periods. The total credit amount is capped at $1 billion in 2022, $1.5 billion in 2023, and $2 billion in 2024 and each year thereafter, adjusted for inflation.
Sponsors: Sen. Warner, Mark R. [D-VA]
Target Audience
Population: Individuals in underserved communities served by CDFIs
Estimated Size: 50000000
- The bill impacts investors who are willing to invest in CDFIs, which are organizations aiming to provide credit and financial services to underserved markets and populations.
- CDFIs typically serve individuals who are low-income or lack access to traditional banking services.
- Investors eligible for this tax credit would include individuals and organizations within the U.S. who have the financial capability and interest to invest in these institutions.
- The ultimate beneficiaries include members of underserved communities who will receive more financial services, credit, and investment due to increased funding for CDFIs.
Reasoning
- The Community Development Investment Tax Credit Act of 2022 aims to enhance financial support to underserved communities through Community Development Financial Institutions (CDFIs). These simulations include investors who stand to gain tax benefits and individuals from underserved communities who will benefit from increased investments in CDFIs.
- Interviewees include a range of demographics: high-income investors, CDFI employees, and members of underserved communities, to reflect diverse impacts.
- Impacts will vary: Investors might see high impacts from tax relief, CDFI employees will see medium impacts due to increased business, and community members will experience low to medium indirect impacts through better financial services and opportunities.
- 10 interviews cover different locations, professions, and impact levels to illustrate the varied effects across the U.S. population.
- CDFIs serve people typically with low-income or those with limited banking access. Thus, interviews involve firsthand beneficiaries and indirect facilitators of this policy.
Simulated Interviews
Bank Executive (New York, NY)
Age: 50 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This tax incentive is a great opportunity to align my investments with social impact goals.
- It encourages more people like me to invest, knowing that there is a financial benefit too.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 9 | 7 |
| Year 5 | 9 | 6 |
| Year 10 | 9 | 6 |
| Year 20 | 7 | 5 |
Small Business Owner (Los Angeles, CA)
Age: 34 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 5.0 years
Commonness: 8/20
Statement of Opinion:
- Access to more funds through CDFIs could transform how I expand my business.
- I hope this policy really directs more resources to business owners like me.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 7 | 5 |
| Year 3 | 8 | 4 |
| Year 5 | 8 | 4 |
| Year 10 | 6 | 3 |
| Year 20 | 5 | 3 |
CDFI Employee (Chicago, IL)
Age: 28 | Gender: other
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 10/20
Statement of Opinion:
- Increased investment will make a significant difference in our capabilities.
- This policy could lead to better job security and satisfaction for us in the CDFI sector.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 8 | 5 |
| Year 5 | 8 | 5 |
| Year 10 | 7 | 4 |
| Year 20 | 6 | 4 |
Teacher (Houston, TX)
Age: 42 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 3.0 years
Commonness: 12/20
Statement of Opinion:
- Though not directly affected initially, better community services will ease my financial worries.
- I support initiatives that bring more educational and financial resources to neighborhoods like mine.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 5 | 4 |
| Year 3 | 5 | 4 |
| Year 5 | 4 | 3 |
| Year 10 | 4 | 3 |
| Year 20 | 3 | 2 |
Retired Police Officer (Atlanta, GA)
Age: 61 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- It's crucial that we provide such support to help the next generations thrive.
- Seeing improved infrastructure and resources is rewarding as a community contributor.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 5 | 4 |
| Year 20 | 5 | 4 |
Student (Detroit, MI)
Age: 22 | Gender: female
Wellbeing Before Policy: 5
Duration of Impact: 7.0 years
Commonness: 15/20
Statement of Opinion:
- Policies like this are essential for my community's revitalization.
- I hope these investments improve educational opportunities where I live.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 7 | 5 |
| Year 5 | 6 | 4 |
| Year 10 | 5 | 4 |
| Year 20 | 4 | 3 |
Non-Profit Director (Seattle, WA)
Age: 39 | Gender: other
Wellbeing Before Policy: 7
Duration of Impact: 8.0 years
Commonness: 10/20
Statement of Opinion:
- This tax credit should bring long-term benefits to programs I manage, via better funding.
- An opportunity to expand outreach efforts, educating more families on financial stability.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 6 |
| Year 5 | 9 | 6 |
| Year 10 | 8 | 5 |
| Year 20 | 7 | 5 |
Freelance Digital Consultant (Miami, FL)
Age: 29 | Gender: male
Wellbeing Before Policy: 6
Duration of Impact: 4.0 years
Commonness: 9/20
Statement of Opinion:
- Additional resources in CDFIs could mean more projects I can involve in.
- This might alleviate some financial unpredictability I face.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 5 | 4 |
Farmer (Rural Ohio)
Age: 47 | Gender: female
Wellbeing Before Policy: 4
Duration of Impact: 7.0 years
Commonness: 13/20
Statement of Opinion:
- Better capital access means sustained operations and improved living conditions.
- Cautiously optimistic about how much impact it will bring to sparsely-populated areas.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 4 |
| Year 2 | 6 | 4 |
| Year 3 | 6 | 4 |
| Year 5 | 6 | 3 |
| Year 10 | 5 | 3 |
| Year 20 | 4 | 2 |
Real Estate Investor (Phoenix, AZ)
Age: 55 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- This credit gives an extra nudge towards investing in meaningful projects.
- Encourages more similar policies integrating economic and social returns.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 9 | 8 |
| Year 3 | 9 | 8 |
| Year 5 | 9 | 7 |
| Year 10 | 8 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $1000000000 (Low: $900000000, High: $1100000000)
Year 2: $1500000000 (Low: $1350000000, High: $1650000000)
Year 3: $2000000000 (Low: $1800000000, High: $2200000000)
Year 5: $2000000000 (Low: $1800000000, High: $2200000000)
Year 10: $2000000000 (Low: $1800000000, High: $2200000000)
Year 100: $2000000000 (Low: $1800000000, High: $2200000000)
Key Considerations
- The effectiveness of the policy in reaching the intended communities heavily relies on the awareness and willingness of investors to participate.
- The gradual increase in the credit cap suggests a focus on scaling up the impacts over time.
- Inflation adjustments ensure that the real value of credits remains stable over time.