Jared Bernstein Blog
By Jared Bernstein
September 3, 2019
A number of people (OK, four…but it’s early) have asked me to respond to the NYT piece from last Sunday on how the Opportunity Zone tax break is nothing but a boon to the rich. As I’ve written in a few opeds, I’ve been a cautious supporter of the program, though I’ve been careful to make the points that a) it’s too early to say much about outcomes, and b) while OZs have the potential to become a wasteful tax shelter mechanism, some early signs are hopeful. And, as the Times points out, some early signs are not.
The problem is, the piece was a list posing as an analysis. It just lists many examples of rich people getting the tax break through the program without a shred of evidence that poor people and places aren’t getting helped. That’s largely because, as noted, it’s simply too early to make this foundational assessment, which is why it’s too early to conclude that OZs are failing to have their intended effect.
In essence, the piece makes two points, neither of which should surprise anyone: rich people have capital gains, and rich investors are taking advantage of the OZ tax break. It then cherry picks a bunch of cases that look bad, where Opportunity Funds are supporting the building of luxury dwellings that would have been financed without the tax break.