The New York Times recently published an article measuring the effectiveness of the federal Opportunity Zones program over the last six years.
The Trump-era incentive attracts investment into underserved communities by offering investors a series of tax incentives, and the program is key in granting these areas the spotlight they need.
The New York Times reluctantly agreed. Federal lawmakers should make it a priority to extend this landmark legislation before it expires in 2026.
Codified by the Tax Cuts and Jobs Act of 2017, the Opportunity Zones tax incentive empowers high net-worth investors to invest their money in historically marginalized communities.
Investors can move their capital into “Qualified Opportunity Zone Funds,” which support businesses and real estate in these federally designated zones.
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If held for 10 years, investors can enjoy tax-free appreciation on their investments.
The policy was championed by a bipartisan coalition of lawmakers, including Sens. Tim Scott (R-South Carolina) and Cory Booker (D-New Jersey) to uplift overlooked and underserved communities through private investment.
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Their vision has been nothing short of extraordinary. According to national professional services firm Novogradac, Qualified Opportunity Zone Funds it tracks have raised nearly $40 billion in equity since 2019, with another three to four times that estimated to have actually been deployed — $120 to $160 billion.
Over half of this money has gone toward new housing projects alone — a major win for cash-strapped governments and their constituents who face a stubborn housing market.
When the Ways and Means Committee traveled to Erie, PA, we heard directly from business owners, stakeholders, and Erie residents about the success of the Trump tax cuts and opportunity zone program.
WATCH BELOW pic.twitter.com/tkwku3h6M0
— Ways and Means Committee (@WaysandMeansGOP) July 17, 2024
Even in its first few years of life, the Opportunity Zones tax incentive has swiftly transformed economies.
In Sen. Tim Scott’s home state of South Carolina, Opportunity Zones have led to increased median household incomes, lower poverty rates and reduced unemployment in many areas.
Similarly, Erie, Pennsylvania — once home to one of the poorest zip codes in America — has seen over $400 million in new, long-term capital investment, thanks to its Opportunity Zone status.
Translation: more money in your family’s savings account, more people making ends meet, and more Americans back to work.
Many of these successes stem from the policy’s free-market incentive structure. By reducing tax burdens for investing in underserved communities, high net-worth individuals are compelled to move their money into these areas.
And this comes at a time when nearly 40 million Americans live in poverty and the cost of living is reaching an all-time high.
Now more than ever, underserved neighborhoods desperately need and deserve every opportunity to get funding.
That’s why federal legislators introduced the Opportunity Zones Transparency, Extension and Improvement Act (H.R. 5761) last year — a measure that would extend the program’s tax benefits through 2028.
While Opportunity Zones deserve a permanent spot in the nation’s tax code, extending the program is a step in the right direction and is widely expected to trigger a rush of capital.
If passed, the ongoing infusion of funds would help sustain long-term economic growth, reduce poverty and spur job creation in the country’s most underserved communities.
It’s no surprise that former President Donald Trump called the program “one of the most successful economic development acts ever in our country.”
The federal Opportunity Zones program has already revitalized countless overlooked communities, and lawmakers should make it a priority to pass the extension to ensure these benefits continue for years to come.
Shay Hawkins is President of the Opportunity Funds Association.
Jill Homan is President of Javelin 19 Investments.
Emily Lavery is Vice President, Fulcrum Public Affairs.
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