How to Get Growth in the Places That Need It Most
The 2017 tax reform law gave the wrong kinds of incentives to help struggling urban areas and regions.
Does this area look beaten-down?
Photographer: Drew Angerer/Getty Images North AmericaPresident Donald Trump was a real-estate developer before he was a president. As a real-estate developer, your goal is to build properties that then go up in price. Whether that happens because you picked a location that was becoming popular and acquired the land cheap, or because the property you built actually created economic value isn't so important to your bottom line.
Thus perhaps it’s no surprise that Trump’s Opportunity Zone program, enacted in late 2017 in his tax reform bill, seems tailor-made for real-estate developers. The program’s stated intent is to stimulate investment in poor neighborhoods, but in practice it mainly acts as a tax break. Unlike the Empowerment Zone program enacted in the 1990s under Bill Clinton, the Opportunity Zones don’t give investors incentives to employ people within the zones, or block grants for investing in local infrastructure and other public goods. Instead, Trump’s program simply allows developers to defer or avoid capital gains taxes on their investments in the zones.