A special tax credit to lure businesses into investigating in areas of high unemployment has been proposed by the administration's urban policy strategists.
The credit idea had been discarded earlier, and it is still being resisted in some areas of the federal bureaucracy. But Robert C. Embry, an assistant secretary of the Department of Housing and Urban Development, said yesterday it would be recommended to President Carter.
Rural areas as well as urban areas coud benefit from the proposal and Agriculture Secretary Bob Bergland joined HUD Secretary Patricia Roberts Harris in sending Carter a memo promoting the idea last october.
Embry, who is coordinating the efforts of a Cabinet-level task force to recommend urban policy programs t Carter by mid-February, discussed the tax credit at a breakfast with reporters. Carter is expected to send his urban initiatives to Congress in March.
HUD task force members say the special credit will stilumate new jobs or halt the loss of current jobs.
In his tax message to Congress Saturday, Carter proposed extending the present 10 percent investment tax credit to cover spending for structures as well as equipment and to allow companies to use the credit to offset 90 percent of their federal taxes instead of 50 percent.
What the urban policy planers are proposing is to give an extra credit - up to 5 more percentage points - to businesses in areas that have jobless rates over the national rate, he proposal is to use a new Labor Department definition, which may be issued this week, of areas with a "labor surpolus" - those where the jobless rate is 20 percent higher than the national rate.
Embry said the task force might recommend a figure larger than 20 percent to reduce the number of eligible areas.
Embry noted that officials of the Treasury Department and the Council of Economic Advisers have expressed reservations about tying the tax credit to investment in high-unemployment areas.
Another source said some economists feel that giving a subsidy to capital is not an effective way to create jobs for low-skilled workers, who make up most of the unemployed in cities. Such a subsidy often goes to industries using highly skilled labor, he added.
A third source said the credit "is really a small subsidy to investment. It's a marginal subsidy, and it's not clear it could offset the pervasive problems that cities face in attracting investment."
The president's current proposal allows tax credits for rehabilitation of existing industrial and utility structures - a provision that administration officials added to encourage investment in cities.
Embry also said the task force would recommend using a variety of federal powers - such as the power to pick recipients of project grants like those for mass transit - to aid depressed and high-unemployment communities. Federal project grants total about $40 billion this year.
As another possibility, he cited the new federal procurement program, which directs the government to buy goods and series from bidders in areas with a labor surplus. This year the policy is being applied to all civilian procurement, which totals at least $18 billion, and since defense procurement. Next year it will apply to at least $7 billion in military purchases.
Embry said the task force will also recommend using federal funds to induce states to come up with land use policies that decrease sprawl and encourage development in central cities.
He said the controversial proposal for an urban development lending institution which has been called "Urbank," would be included in the recommendations. The administration has been debating such a proposal to stimulate private investment in cities for months.
But at a news briefing last weekend HUD Secretary Harris said Urbank "has never been alive. It is in a sense the gleam in the eye of several parents. It's not even in the gestation period," she said.