Investors Get Poverty Tax Breaks for Already Improved Area Development
Tax credits intended to spur investment in the poorest areas are generating profits through generous tax breaks for companies that put money into already up-and-coming locations, according to the Associated Press.
Such companies as Amazon and New York-based Cadre—a real estate firm co-founded by Donald Trump’s son-in-law Jared Kushner and in which he still has a $25 million stake—are pouring money into so-called “opportunity zones.”
Amazon amzn put its new New York City location in an opportunity zone with a median household income of $130,000.
A spokesperson for Cadre said the company will target a “small subset” of zones in Los Angeles, Seattle, and Miami. AP noted that these cities are expected to see population and income growth faster than the national average.
Created as part of the 2017 massive tax cut legislation, an opportunity zone was supposed to be a low-income census tract nominated by its state. Investments in the area get highly favorable tax treatments. To qualify, the area was supposed to have a poverty rate of 20% or median family income under 80% of the statewide median family income.
Because of some loopholes, that can include tony real estate. The Brookings Institution estimated that 57% of all neighborhoods in the country are technically eligible. Of the final state nominations, 28% “were not poor…were college campuses…or (very rarely) were areas where no one lived.”
Timothy Weaver, a professor of urban policy and politics at the University of Albany, wrote in The Conversation that, historically, similar tax-driven investment schemes have rarely succeeded. Even in touted examples, success often came at the loss of surrounding areas.
An earlier version of this article incorrectly stated the locations Cadre was interested in. Cadre is targeting areas in Los Angeles, Seattle, and Miami, not the Upper East Side of Manhattan or Ledroit Park in Washington, D.C.
