South Carolina Senator Scott inserted a provision in the recently enacted tax bill to promote investments in low income/high poverty census tracts. Governors are eligible to designated one-quarter of such tracts in their state as Opportunity zones. Large fiscal institutions are now able to establish Opportunity Funds that may only make investment in Opportunity zones. Here is the incentive. If you have unrealized capital gains, you may transfer them to an Opportunity fund. If you keep your money in the fund for seven years, you will pay capital gains taxes at 85% of the going rate of about 24%. If you leave your unrealized capital gains in the Opportunity fund for 10 years, you will pay even lower capital gains taxes.

There are quite a few locations in Detroit and the ring that would seem to quality. They currently have high poverty rates but there is development or redevelopment nearby, so they have investment potential. Does anyone know who is taking the lead on this for the mayor or the governor?

Is this the most serious federal effort to develop challenged urban neighborhoods since the Clinton administration enacted Jack Kemp’s proposal for Empowerment Zones. I have the impression that the Detroit Empowerment Zone has been, at the very least, moderately successful. Does anyone have
convincing evidence?