Some of the areas were selected as opportunity zones, which is a tax break zone for low-income communities. It could help start-up businesses to invest in the areas. There would be the regional development in economy and infrastructure as well.
The benefits of the investors in the opportunity zone will be largely 3:
1. Investors are temporarily deferred of inclusion in taxable income for capital gains reinvested in the fund.
2. Step-up in basis for capital gains via opportunity funds. The basis is increased by 10% if the fund is held by the taxpayer for at least 5 years, and adds up 5% more if held for at least 7 years.
3. A permanent exclusion from taxable income of capital gains if the funds are held for at least 10 years.
However what the article brings up is that this regulation may just benefit real estate developments rather than start-up businesses. If that happens, the outcome may bring economic development, but the wealth gap may increase. Values of the opportunity zones will increase if real estates and businesses are invested in them, but if real estate grows more rapidly than the business sectors, the lease or property price may become more burdensome to the inhabitants of the zones. Hopefully it does not result in a bigger income inequality, but an overall improvement of certain rural (or poor) areas of the States.
https://www.nytimes.com/2019/04/17/business/economy/opportunity-zones-treasury-regulations.html
2 comments:
Brexit is the beginning of a re-alignment of the European political spectrum which saw people say that unelected bureaucrats in the Brussels do not get to write the laws of a people hundreds of miles away. However Brexit is not the end of the re-alignment, the end of the occupation of six Irish counties by an Imperialist foreign power is a continuation of that re-alignment. The only party opposed to the Good Friday Accord is the Protestant Northern Irish DUP now propping up Theresa May's government. If the DUP wishes to risk the end of British control of Northern Ireland then they should be willing to accept a soft-border. As regards to Speaker Pelosi's comments, pandering for the Irish Vote is not a new political tactic.
I think the application of tax-break zones is an interesting way of stimulating growth in our economy. Given the US's current regional and overall labor shortage due to younger workers moving to more profitable areas, this seems like a plausible way to make sure that local development is being included and considered in expansionary efforts. By incentivizing businesses to invest in these areas, it may even help break the cycle of demographic decline that's threatening the US's growth forecasts. I do share your concern about this potentially increasing income inequality, so hopefully some measures are put into place to avoid the possible gentrification of these areas.
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