The news about small-town life in America is not all bad. We have discovered through this recent article in The New York Times that there is an intriguing provision in the recent tax bill that would allow—in fact encourage—long-term investment in troubled towns. By being designated “Opportunity Zones,” these towns or neighborhoods within towns would be targeted for development by means of tax incentives. What finer use of this country’s wealth than the reinvigoration of its civic life at this sub-metropolitan level? Before investing overseas let us look to our own. Our responsibility to our immigrants—our “huddled masses”—does not cease with their admission at Ellis Island.
If the zones succeed, they could help revitalize neighborhoods and towns that are starved for investment.
They could also deliver a windfall, in the form of avoided capital gains taxes, for corporations and financiers who invest in the Opportunity Zones.
Yet risks remain, including whether investors will steer dollars toward areas that really need investment.
The zones were included in the tax law by Senator Tim Scott, a South Carolina Republican who was born into poverty in North Charleston, and based on a bill he co-sponsored in 2017 with several Democrats. The effort to create the zones was pushed by an upstart Washington think tank, the Economic Innovation Group, and its patron, the tech mogul Sean Parker, of Napster and Facebook fame, who enlisted Mr. Scott and others to sponsor the legislation.
“I had to explain it several times to folks,” said Mr. Scott, whose co-sponsors on a previous iteration of an opportunity zone bill included Senator Cory Booker, Democrat of New Jersey, and House lawmakers from both parties. “I came out of one of these communities, so I believe that there’s untapped potential in every state in the nation.”
Mr. Scott said that he had discussed the plan with Mr. Trump and that the president had later spoken approvingly of it. But in the rush to pass the bill over the course of a few frenzied weeks, the idea was never debated on the floor of the House or Senate. It was never promoted by Republican leaders or the White House.
“This is a little billion-and-a-half dollar part” of the law, Kevin Hassett, the chairman of Mr. Trump’s Council of Economic Advisers, said in an interview. “But if it’s successful, we’ll look back 10 years from now and say this was one of the most important parts of the tax bill, and one we didn’t talk nearly enough about.”
Mr. Hassett has a longtime interest in providing tax incentives for economic development in distressed areas. He said he first began discussing opportunity zones with Mr. Parker several years ago at a meeting in Mr. Parker’s Greenwich Village home. Before joining the Trump administration, Mr. Hassett wrote several white papers to help elevate the idea as part of an extensive, multiyear effort by the Economic Innovation Group to win support.
Mr. Hassett said he was never paid for any of that work. His interest, he said, stems from growing up near Turners Falls, Mass., which has struggled since the closing of its longtime paper mills.
Mr. Parker, who made his fortune as the first president of Facebook, was looking for a way to steer investors to parts of America that have been starved for economic activity in the wake of the Great Recession.
To be continued