There’s a lot of good news when it comes tax reform—like how it’s helping families, driving momentum, and boosting small businesses nationwide. But there’s one key facet of the Tax Cuts and Jobs Act that you may not have heard as much about: Opportunity Zones—something Speaker Ryan has long fought for to reduce poverty and develop communities.
What are Opportunity Zones? In layman’s terms, they are just what their name implies—areas of the country in need of economic opportunity. By definition, they’re distressed communities identified by the states that qualify for private investment in exchange for tax incentives for said investors.
As the speaker recalled on The Hugh Hewitt Show recently, “When I was a young staffer working for Jack [Kemp], we worked on this idea called Enterprise Zones to have zero capital gains taxes on investments in poor areas. That was a dream of Jack’s his entire career. I’ve worked on it my entire career.” He also discussed this long sought-after win on Squawk Box: “[Opportunity] zones are now law of the land. So the critical component of our poverty fighting agenda, that’s now the law of the land.”
The law of the land, indeed. Following enactment as part of the tax bill, these zones are now being set up around the country. This month, the Treasury Department and the IRS announced the first round of Opportunity Zone designations for 18 states, including the speaker’s own stomping grounds of Wisconsin. Since that announcement, Opportunity Zones have been added in six additional states and U.S. territories.
Make no mistake: We are seeing great economic turnaround thanks to tax reform—but pockets of the country remain in desperate need of revitalization. As the New York Times put it, “In huge swaths of the country, the economic recovery has yet to arrive.” A 2017 study found that “52.3 million Americans live in economically distressed communities,” or low-income areas that qualify as designated by the Census. That’s a lot of untapped potential left on the sidelines simply because of their zip code.
Enter Opportunity Zones, which provide a tax incentive for investors to pour capital into these areas to help stimulate long-term growth. This new private investment will support a wide range of development activities—like entrepreneurship, charter schools, or job training—which in turn will lead to boosted economic growth and job creation.
As Speaker Ryan said last week, better empowering the individual will allow more Americans to “realize their own independence—and the economic and social benefits that come along with it.” By setting up Opportunity Zones in distressed communities nationwide, more people will be able to do just that.