By Jared Bernstein
August 25, 2019
Most of the changes to tax policy in the Tax Cuts and Jobs Act, the 2017 tax cut passed by Republicans in Congress, were designed to cut taxes for wealthy households and corporations, and these cuts have worsened inequality and led to much higher deficits.
But there was one bipartisan policy in the tax plan with the potential to help low-income people by incentivizing investments in their communities: "opportunity zones."
Eligibility for this tax break on capital gains (income from selling an appreciated asset) is conditioned on making long-term investments in areas designated as distressed. It is one part of the tax plan that has real potential, but, like any bank-shot tax break, it also carries significant risks, including wasteful subsidies, tax sheltering, and the chance that the program will fail to reach those who need it the most.