Poverty rate to be reduced by 11 percent in Opportunity Zones through billions in investment and new job opportunities
The increasingly globalized economy has meant prosperity for many, yet millions of Americans have been overlooked, devoid of the same benefits or the potential for upward mobility that comes from widespread investment. Fifty-two million Americans live in economically distressed communities, including the thirty-five million who reside in Opportunity Zones. A lack of investment has contributed to this economic distress, and a lack of access to economic opportunity can lead to negative outcomes in the vital measures that matter to all communities, including high unemployment rates, stagnant wages, low graduation rates, unsafe neighborhoods, and shorter life expectancy.
To help these communities, Opportunity Zones were introduced in the Tax Cuts and Jobs Act, which President Donald J. Trump signed into law in December of 2017. Opportunity Zones are economically distressed communities located in urban, rural, suburban, and tribal areas. Defined at the census tract level, Opportunity Zones were selected by the governors of each State and territory, as well as the Mayor of the District of Columbia, and formally designated by the Department of the Treasury. The Opportunity Zones tax incentive is designed to spur economic development and job creation in these very communities through preferential tax treatment for those investing certain eligible capital gains into Opportunity Zones.
The Opportunity Zone tax incentive is a powerful new tool meant to help bring private capital into underserved communities. However, economically distressed communities require more than private capital tax incentives alone. Many of these communities are in need of public sector investment and guidance to ensure they develop the foundations and investment connections necessary to support a thriving private sector. Public investment in economic development, entrepreneurship, education and workforce training, and safe neighborhoods – along with guidance for engaging with investors and entrepreneurs – will help communities unlock private capital to create sustainable growth. This public sector commitment serves as a means by which to attract and continue the flow of private capital investment into Opportunity Zones.
The White House Council of Economic Advisers (CEA) delivered a Progress Report in August 2020 on President Trump’s Opportunity Zones initiative to White House Opportunity and Revitalization Council Chairman Ben Carson, Secretary of the U.S. Department of Housing and Urban Development. The CEA estimates that Opportunity Zones have already generated approximately half a million jobs, attracted $75 billion in capital investments, and are on track to reduce the poverty rate in Opportunity Zones by 11 percent-lifting 1,000,000 people out of poverty
“This tremendous progress report shows the American people, especially the families who have felt forgotten for years, President Trump’s Great American Comeback is in fact underway,” said Secretary Ben Carson. “Opportunity Zones have created half a million jobs, generated billions in economic investment, and reduced our country’s poverty rate-and is just the beginning. President Trump’s bold leadership is providing families with new opportunities to break the cycle of poverty and local leaders with a tool to assist them in breathing new life into communities that have been forgotten for far too long.”
“At every turn President Trump continues to fight for every American,” said Acting Domestic Policy Council Director Brooke Rollins. “Today’s CEA report proves that the Opportunity Zone tax incentive’s focus on job growth, rewarding employment, and removing bureaucratic middle-men is lifting millions out of poverty and revitalizing communities that haven’t seen investment in decades.”
To compile the Progress Report, the Council of Economic Advisers examined Opportunity Zone investments and activities through the end of 2019. CEA found the tax cuts have spurred a large investment response. Highlights of the report include:
- Opportunity Zones have attracted $75 billion in capital investments as of the end of 2019. $52 billion would not have entered Opportunity Zones without the incentive. This figure represents 21 percent of all annual investment in Opportunity Zone communities.
- Opportunity Zone investments have created at least 500,000 new jobs in designated Opportunity Zone tracts.
- Investments in Opportunity Zones will lift approximately one million Americans from poverty. The poverty rate in Opportunity Zones will decrease by 11 percent.
- An Opportunity Zone designation alone has increased private property values within the designated areas by 1.1 percent. For the nearly half of Opportunity Zone residents who own their own homes, the increase provides an estimated $11 billion in new wealth.
The economic benefits that new and innovative investments bring to communities are significant. Without robust economic development, local communities cannot meet the needs of their residents or remain competitive in an increasingly changing national and global economy. Further, the investment divides within urban areas pose challenges for economic development. The Council’s Economic Development work stream seeks to address both issues.
