A tax credit for investments in a community development financial institution. (FE)
Impact
This bill aims to bolster economic development within the state by promoting investments that are targeted at local projects through CDFIs. These entities are certified to facilitate community-focused financial services, thereby helping to enhance economic opportunities in underserved areas. The tax credits offered through AB1155 could lead to increased funding for local projects and businesses, potentially stimulating job creation and improving the quality of life in various communities across Wisconsin.
Summary
Assembly Bill 1155 proposes a tax credit incentive for individuals making qualified investments in registered community development financial institutions (CDFIs) in Wisconsin. The bill encourages investment of at least $10,000 in these institutions, potentially enhancing access to financial resources for communities in need. Specifically, the legislation allows for a tax credit of 10% for investments between $10,000 and $150,000, and 12% for investments above $150,000 up to $500,000, for taxable years starting after December 31, 2022, and before January 1, 2025.
Contention
Significant considerations arise regarding the terms under which credits can be claimed and the implications for both investors and the community development sector. For instance, if investors withdraw their funds from the CDFI before the completion of the designated investment period, they will face repayment of a portion of the tax credits received. This aspect of the bill could deter short-term speculative investments and encourage longer-term financial commitments, aligning investor interests with community needs. However, this stipulation may also lead to concerns over the attractiveness of the investment opportunity, potentially limiting participation from smaller investors.