Opportunity Zones Could Be The Key to Helping Struggling Areas in America


According to the numbers, the American economy is on track to recover much of what was lost during the Great Recession. Employment is up, jobs are becoming more plentiful, and consumer confidence is high. That's what the numbers say, but what about the real stories of everyday Americans who are still waiting to see the effects of this supposed economic growth in their communities?

When looking beyond what the numbers alone say, one can see that the job growth being reported in economic news is very concentrated in a few areas, and that many regions are being left in the dust. As economist John P. Bailey discusses, these areas need economic development, and they need a conscious effort to help them grow.

His solution? Opportunity zones created through the Tax Cuts and Jobs Act, which would give investors tax breaks on capital gains, incentivizing investment in these oft-forgotten areas of the country.

There are two components to the program. First, governors are in the process of designating up to a quarter of their states’ low-income, high-poverty census tracts as Opportunity Zones.

The second part is the creation of Opportunity Funds—a new class of investment vehicles that gives investors the chance to reduce their capital gains tax when they invest in projects located in these areas. That tax incentive increases the longer the investment is kept in the community. If the investment is held for more than ten years, the investor will pay no additional capital gains on investments made through the fund.

The idea is to incentivize new investment in these areas. Most venture capital goes to just three states: California, New York, and Massachusetts. That leaves most everywhere else behind on new investments. By creating these opportunity zones, potential investors may see new horizons for job and industry investment. In the process, they will gain a lot of potential workers, and the people in these communities will gain the jobs that they have needed for so long.

Americans have invested in new markets across the world for years now. Time to bring the concept home.

Do you live in an area that needs an Opportunity Zone? How would it benefit your community? Share your thoughts with us!