Opportunity Zones provide federal capital gains tax breaks, supposedly to encourage wealthy investors and corporations to invest their pre-tax gains in historically disenfranchised neighborhoods, help grow local economies and ultimately, improve the long-term prospects for zone residents. But as David Wessel shows in his book, Only the Rich Can Play: How Washington Works in the New Gilded Age, that hasn’t been the case. Despite limited data (the enabling legislation for OZs has next to no guardrails or meaningful reporting requirements), Wessel gives numerous examples of how the winners of the OZs have often been affluent communities and already-in-the-works projects.
Happy nearly summer, Good Jobs First friends. This is Arlene, with a much overdue update on what we at Good Jobs First have been up to this very busy spring.
Let’s start with some huge news out of Texas, where a massive corporate subsidy program is now on track to expire next year. The program is called Chapter 313, and an explosive Houston Chronicle series (paywalled!) found how little Texans get from a program over $1 billion per year.
The idea behind the Opportunity Zones is to persuade individuals and corporations to invest their capital gains in projects in poor neighborhoods. In return, those investors receive lucrative federal tax breaks. No matter what one might think about this underlying idea of OZs, the execution and administration of the program has fallen short. Their pervasive lack of transparency and accountability is largely to blame.
Opportunity Zones (OZs), the new federal tax break for investing in specially designated census tracts, are estimated to cost the federal treasury $1.6 billion a year. But because all but a few states tie their personal and corporate income tax systems to Uncle Sam’s, OZs will also have a direct and negative impact on state revenues.