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Summary: HB 2061 seeks to draw private sector investment in low-income community businesses by extending premium tax credits to qualified investors. The comptroller would have to certify which investments qualify after investors apply, the amount of tax credits available would be capped at $750 million, and the program would last for duration of 7 years. HB 2061 would set up the New Markets Performance Guarantee Account that qualified investors would be required to deposit $500,000 dollars into to ensure they distribute funds qualified for investments. There are also various fees to ensure these investors appropriately distribute funds, and HB 2061 establishes mechanisms to recover any tax credits if an investor violates rules.
Analysis: HB 2061 gives private investors incentives to invest in low income businesses over a period of seven years. In a free market, however, government would not be able to direct investment with incentives. Investment would depend only on whether the investor believed the company will succeed and provide a good return. While HB 1061 provides a modest premium tax credit as incentive, provides no loan guarantee, and it is capped at seven years, it still violates our free market principle. For this reason, we oppose HB 2061.