Opportunity Zones May Someday Help Poor Communities. They Already Are A Tax Shelter For High-Income Investors
Opportunity Zones commit one of the most egregious, and common, sins of tax policy. They provide incentives to encourage people to do things they would have done anyway. Indeed, The Times identified developers who were getting taxpayer subsidies, not only for deals they likely were going to do, but for those they began before the law ever passed.
In the case of OZs, the sins are multiplied because the subsidies are so generous. The beneficiaries overwhelmingly are wealthy investors and real estate developers who profit from the deals.
Worse, there will be losers. Residents of truly low-income communities will lose out because investor capital will be drawn to projects in higher-income communities more likely to generate bigger returns. And, of course, taxpayers will end up subsidizing projects that didn’t need or warrant assistance in the first place—at a time when the federal budget deficit already exceeds $1 trillion.
One issue to watch is whether existing tax subsidy programs, such as New Markets Tax Credits, that do focus on poor communities, can co-exist with the glitzier OZs..