CNBC, October 19, 2018: Trump’s ‘opportunity zones’ are popular with investors, but they might offer less benefits to voters
Just weeks before the midterm elections, the Trump administration announced details of tax breaks designed to help spur investment in economically distressed neighborhoods.
The new program targeting so-called “opportunity zones” was included in the $1.5 trillion tax overhaul enacted late last year. Republicans, who are defending majorities in the House and Senate this November, had hoped to stake their campaign messaging to the tax cuts. But the measure failed to resonate with voters on a large scale.
The plan has already drawn strong interest from investors. Last month, Treasury Secretary Steven Mnuchin predicted that the new program would generate more than $100 billion in fresh capital for projects in targeted neighborhoods.
Any gains from the fund are permanently shielded from taxes if the investment has been held for 10 years. In addition, the initial investment will be discounted by up to 15 percent for tax purposes after seven years.
The benefits for the residents of these opportunity zones, though, are harder to measure. A lot will depend on the details of the type of projects that qualify for these tax breaks.
The enterprise zones they studied often fell short in creating jobs for residents of targeted neighborhoods because “the majority of jobs were taken by commuters from outside the enterprise zone.”
And they found that these tax breaks usually ended up costing more money than they generated in added tax revenues.
