WASHINGTON, DC (KAIT/GRAY NEWS) - A big tax break for wealthy Americans could be the break struggling communities need. But, skeptics worry the plan only amounts to a handout to the rich, not a hand up to the poor.
Hundreds of millions of dollars are already set aside, ready to be injected into nearly 9,000 struggling communities across the country. White House spokespeople expect the investment pool to exceed 100 billion in the near future.
“We can already see in the data, that there’s kind of a race to help the most-disadvantaged people in America,” said White House Chief Economic Advisor Kevin Hassett.
A recent change to the country’s tax law allows those who cash in by selling stock or property to slash their tax bill. But, there’s a catch. Investors need to re-invest their profits into businesses and properties in areas singled-out for an economic pick-me-up. Investors only get the full tax break if they keep that cash in the community for ten years.
Housing and Urban Development Secretary Ben Carson said Americans can count on seeing results. “You’re going to be creating jobs, and opportunities for people to gain the kind of skills that will allow them to escape dependency,” he said.
One of the local officials to attend the meeting Wednesday was Arkansas Economic Development Commission Director Mike Preston.
Preston said the concept will provide a key boost to the state’s economy, both on the long and short term, in areas around the state including Jonesboro.
“You know, Jonesboro is prime for it. And then we have three opportunity zones in Jonesboro area, really focusing on that corridor from downtown going out to the University. I know it’s been a desire of the University, a desire of the Mayor and Jonesboro to really, really revitalize that area. This opportunity zones program is going to give it that shot in the arm that it really needs," Preston said.
The White House still needs to iron out the fine print for the rules and regulations surrounding the designate areas known as ‘Opportunity Zones’. Critics said it’s already clear -- the idea is fundamentally flawed.
“The overall effect of these programs have been very limited,” said University at Albany Prof. Timothy Weaver.
Weaver argues developers don’t need a financial assist in places like New York City – which has opportunity zones designated in Manhattan, Brooklyn, and Long Island -- or anywhere else where investment is already on the rise. He said based on his research and that of others, historically, investors use incentives like these to chase profits – not invest in community-centered projects like low-income housing.
“It’s not going to be the kind of thing that’s going to help poor people in poor neighborhoods,” Weaver said.
Hundreds of communities across the country want to give it a shot though.
Locals are making a trip to the White House Wednesday to learn more about selling themselves to investors.