Policy Briefs

Co-authors: Bruce Katz, Jeremy Nowak, Jamie Rubin, Dan Berkovits

The Tax Cuts and Jobs Act of 2017 provides a new incentive—centered around the deferral of capital gains taxes—to spur private investments in low-income areas designated as Opportunity Zones. Given the significant interest among investors, it is possible that this new tax incentive could attract tens of billions of dollars in private capital, making this one of the largest economic development initiatives in U.S. history.

Download How States Can Maximize Opportunity Zones

The Tax Cuts and Jobs Act of 2017 established an Opportunity Zones tax incentive, which provides a federal capital gains tax deferral and partial exemption for investments in designated Opportunity Zones. Governors in each state will select Opportunity Zones from an eligible group of low-income census tracts. Selections must be made by the third week of March 2018 (or third week of April 2018 if an extension is requested). Given the significant interest among many private investors, it is possible that Opportunity Funds will attract tens of billions of dollars in private capital, making this one of the largest economic development programs in U.S. history.

This policy brief puts forward four principles to guide the selection and development of Opportunity Zones. The principles are designed to enable the greatest job creation potential and the most significant advantages for lower income resident employment, both, inside and outside the eligible zones. Throughout the document we stress the use of data analytics, local knowledge, and the need to see these incentives as just one part of a broader economic development strategy.

While there has naturally been focus on the impact of Brexit on London, last week’s vote to leave the European Union is a bitter pill for all the major cities across the United Kingdom. In a dynamic familiar to observers of current American politics, the vote broke down along an urban and rural divide. The “Remain” coalition largely consisted of some of the UK’s largest cities—Manchester, Glasgow, Leeds, and Edinburgh—while even those who unexpectedly voted to leave—Birmingham and Sheffield—did so by a very thin margin.