Elections 2012: Indian Country’s Disappearing Tax Credits

Elections 2012: Indian Country’s Disappearing Tax Credits

Mark Trahant
10/25/12

The jobs, jobs, jobs, mantra has special significance in Indian country where unemployment rates are far higher than the rest of the country. Yet while politicians from both parties go out of their way to promise tax cuts (to create jobs, of course) there is very little discussion about two tax credits that actually deliver jobs.

One of the most generous is the Indian Employment Tax Credit. It’s currently expired, but renews periodically. Or at least that’s what many employers expect.

TALX, Tax Intelligence newsletter, says a renewal was in the president’s FY 2012 budget and the House Ways and Means Committee is considering a bill to make the credit permanent. (At least until tax reform changes everything.) Tax Intelligence says: “In the past, this credit has been renewed without issue and TAXL anticipates that it will be renewed again.”

It’s a pretty good deal for companies that hire Native Americans, up to $4,000 per employee. Even better the credit can be applied one-year back or be carried forward for up to 20 years. (This is a way to take the credit when the business is having a profitable year and skip when the company is break-even or at a loss.)

Rep. Tom Cole, R-Oklahoma, has said these types of tax credits are important to Indian country and he is working to renew them. “Each year,” Cole writes on his website, “I work with my colleagues to extend the Former Indian Land Tax Credit and the Indian Employment Tax Credit. The provisions will provide tax incentives for businesses that locate or expand on former Indian lands and provide a tax credit for businesses that hire Native Americans and their spouses. Without an extension, both of these provisions will expire at the end of the year. These provisions are critical for Oklahoma's business and Native American community. The former Indian Land Tax Credit provided incentives for businesses to move former Indian lands. The state of Oklahoma says: “More than two-thirds of the lands in Oklahoma meet the Internal Revenue Service-qualifying definition of former Indian lands and qualify for accelerated depreciation. Qualifying lands may include previous tribal land which may have been transferred to new ownership.”

Seattle attorney Gabriel “Gabe” Galanda, a partner with Galanda Broadman PLLC, writes there are two other expiring tax credits to consider.

First, the Low-Income Housing Tax Credit Program, through which tax credits are available for low-income housing projects on homes that were constructed, rehabilitated or acquired since 1986, including those in Indian country, was available until September 30, 2011. And the Work Opportunity Tax Credit, a federal tax credit incentive for private-sector businesses that hire individuals from twelve target groups who have consistently faced significant barriers to employment, including certain Indians. That also expired in 2011.

“Indian country must urge that these tax incentives be extended so that tribal governments can continue to attract private capital and create new jobs for tribal members and neighboring communities,” Galanda writes. “Between now and November any calls to Capitol Hill will likely fall on deaf ears. But come after the election, tribal constituents should call their Delegation to urge that Indian country’s tax and job needs not be forgotten.”

Mark Trahant is a writer, speaker and Twitter poet. He is a member of the Shoshone-Bannock Tribes and lives in Fort Hall, Idaho. He has been writing about Indian Country for more than three decades. His e-mail is: marktrahant@thecedarsgroup.org.

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