Subsidy Sheet: The coming Opportunity Zone Boondocalypse

‘Twas a small mercy, but one consolation of Trump’s Opportunity Zone program is that it was never supposed to last forever. Lobbyists crafted the law so that 1) Investments couldn’t be made after 2026 and 2) Investors couldn’t benefit after 2047. Death, to quote Steve Jobs, is the best invention of life.

Unfortunately, OZ enthusiasts prefer the Peter Thiel approach of trying to live forever. Lobbyists, working groups, and OZ investors are already calling for a huge expansion of an already massive tax giveaway for the very wealthy (note that we already have a huge problem with inequality since the top 10% of households own 67% of the wealth). The new push for gutting capital gains taxes include making OZs permanent – as if one decade of government investments in yacht marinas, gun megasellers, and luxury apartments with indoor golf were not enough. OZ grifters also want to:

• Allow investors to realize capital gains (and not be taxed) sooner. Currently, investors need to hold their investments for ten years in order to get tax-free benefits from the gain. A complicated reinvestment procedure proposed by supporters could change that.
• Expand the number of purportedly low-income communities the program can reach from 25 to 40 percent. This makes it appear that the program will reach more low-income people, but as research has shown, OZ benefits tend to go to wealthy areas within low-income districts.
• Increase the benefits investors can receive. Apparently taking $2 billion annually from the federal government just isn’t enough.

In all fairness, some supporters have also called for more transparency for the program. But given the program’s atrocious track record of funding luxury projects and producing no measurable benefit for lower-income people, transparency is a pipe dream.

Senator Gianaris and the State Senate have tried to pass legislation ending NY’s tax break (S3340 (Gianaris) / A3246 (Dinowitz)), but the state has refused, arguing that it doesn’t need to act on tax breaks that won’t go into effect until 2029. Elected officials can no longer use that argument – the time to act is now.

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Other NY corporate giveaway news from this week:

• The Crain’s editorial board called for the NYC Broadway tax credit to end, saying, “Making sure the giraffes in ‘The Lion King’ continue to have top-of-the-line pelts seems like the least of our worries.” Governor Hochul has proposed increasing the tax break from $300 to $400 million annually, and extending it for another two years.
• Spurred by the Governor’s new $1.8 billion in proposed handouts, the film/TV propaganda machine is back at it with a new opinion piece from the Buffalo Niagara Film Office claiming that the program is “driving economic growth in NY” (Buffalo Rising). Not mentioned is the state’s recent analysis showing that the credit only gets NY 23 cents on the dollar.
• ICYMI: A developer is seeking $172,000 in tax breaks from the Niagara County IDA for a property that would host an A&W and Moe’s Southwest Grill (Investigative Post). “What about the root beer?” board members asked. “ Is it coming, too?”

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