Can Free Enterprise Cure Urban Ills? Lost Opportunities for Business Development in Urban, Low-Income Communities Through the New Markets Tax Credit Program

Abstract

Today, black-owned enterprises are one of the most dynamic elements of the U.S. economy (U.S. Census Bureau News). At the same time, many minority-owned businesses struggle to flourish in urban, low-income communities, even as these communities receive life-giving transfusions from business development programs, such as the New Markets Tax Credit Program (Community Renewal Tax Relief Act 2000, tit. 1, subtitle C, sec. 121(a)). While the New Markets Program increased economic development in many urban and rural areas, it has missed the opportunity to significantly invest in minority-owned businesses in low-income urban communities, which historically has been the economic cornerstone of black communities.

As Congress considers whether to reauthorize the New Markets Program, this Article examines the origins of the Program and the entrepreneurial legacy of black America. Has the New Markets Program achieved its laudable goal – to stimulate free enterprise in poor communities that have been left behind? Has business development promoted by the New Markets Program translated into broader community revitalization? Have investors recognized and acted upon investment opportunities in isolated, racially segregated, and blighted communities? Have investors’ for-profit interests harmonized with the interests and needs of low-income community residents? While some would judge the New Markets Program as an overwhelming success, this Article asserts that the Program has, with few notable exceptions, missed the opportunity to invest in minority-owned businesses in low-income urban communities. The Program’s inattention to this area seriously diminishes its long-term impact in poor communities of color.

Keywords: Free Enterprise, Tax Credit Program, Tax Incentive, Business Development, Low-Income Investment, New Markets Program, Black Entrepreneurship, Minority-Owned Businesses