Op-Ed originally posted in Times Union
by Tom Speaker, Policy Analyst
Question: Why should New York taxpayers subsidize guns, oil and crypto? Answer: They shouldn’t. And that’s why it’s time for the governor and Legislature to fully and finally end New York’s absurd Opportunity Zone tax break.
The Trump administration established the federal Opportunity Zone program through the 2017 Tax Cuts and Jobs Act. The idea behind the program was that by giving very wealthy people tax breaks for investing in high-poverty/low-income areas, the influx of cash would trickle down to the poor and revitalize local economies.
As researchers and journalists soon revealed, the program is a total boondoggle. The New York Times, The Wall Street Journal and ProPublica published stories showing that Opportunity Zone beneficiaries included a superyacht marina, luxury apartments with dog spas and properties owned by Trump cronies like Jared Kushner and Anthony Scaramucci.
What these stories didn’t mention is that many parts of the federal tax code are mirrored by states like New York. Because of this, the state’s tax code gives New Yorkers tax breaks for investments in Opportunity Zones anywhere in the country — meaning that instead of helping support our state, our tax revenue could instead go to a gun manufacturer in Florida. That’s exactly what may happen if the state doesn’t end the Opportunity Zone tax break by passing S543/A2170.
My organization, Reinvent Albany, published a report showing some of the industries that could benefit from New York tax revenue under Opportunity Zones:
- Guns. An Opportunity Zone fund has been set up for Big Daddy Unlimited,a gun mega-seller in Gainesville, Fla. The company aspires to be an Amazon for guns, and customers can access its massive inventory of assault rifles, magazines and scopes with just a few clicks. Until last year, Big Daddy offered an “Alex Jones discount,” named after the extremist talk show host who claimed that the 2012 Sandy Hook massacre was a hoax perpetrated to take away Americans’ guns.
- Oil, gas and crypto. At least three funds have been set up to support companies that drill for oil and gas — and these could all be supported by New York tax revenue, despite the steps that the state has taken to fight climate change. Two funds also support crypto mining, which has a high carbon output.
- Parking lots for billionaires. There are two Opportunity Zone funds that support yacht marinas — one in Florida, one in Missouri — and another fund supports a company that builds hangars for billionaires’ private jets.
- Las Vegas casinos. Dream Las Vegas, which is currently under construction, will feature “526 luxury rooms and suites, casino gaming, food and beverage venues, a pool and day club, retail venues and a full-service fitness center” — all which our taxpayers could help build.
- Luxury real estate across the country. The vast majority of Opportunity Zone investments go to high-end real estate, and New York is likely to lose a lot to fancy apartment buildings despite the housing crisis in our state.
How much will New York lose to these industries? It’s hard to say because the program was established with almost zero transparency requirements. But Citizens Budget Commission, a respected budget watchdog, ran the numbers and found that Opportunity Zones could cost New York up to $424 million a year after 2029 — $284 million for the state and $140 million for New York City.
In 2021, the state axed part of its Opportunity Zone tax break in the budget. Our state leaders must finish the job and end this Trump giveaway to luxury real estate, guns, oil and crypto for good.