Turns out even lawmakers on Capitol Hill think it’s not the government but the private sector that must make the needed investments to turn around struggling areas of the country. So a group of lawmakers has come up with a tax proposal to do just that.
The Republican-led Congress is getting ready to debate the Investing in Opportunity Act, but get a load of this: it’s a bipartisan bill! Whaa? Unheard of, it would seem, but a real-live attempt at creating some good.
The proposal is the work of Democratic Rep. Ron Kind of Wisconsin and Republican Rep. Pat Tiberi of Ohio in the House of Representatives. Sens. Tim Scott, R-S.C., and Cory Booker, D-N.J., are shepherding the effort through the Senate. The bill is aimed at spurring private-sector investment in “distressed communities,” combating both poverty and the lingering gaps in economic recovery.
Those communities account for 50 million Americans that are below average thresholds on education, unemployment, poverty, median income ratio, and housing availability.
The legislation would allow investors to defer paying capital gains taxes if they reinvest in “opportunity funds” that would be targeted at “opportunity zones,” or a low-income communities designated by state governments.
“There’s really no direct federal involvement other than we defer capital gains,” Tiberi, a member of the House Ways and Means Committee, told a small group of reporters gathered in Scott’s office Thursday. “There is a cost because of the deferral of capital gains, but ultimately, those will be paid.”
The fact that the bill allows state governments to direct the funds and does not involve additional federal funds being sent to these communities should make it attractive to lawmakers on both sides of the aisle, the bill’s proponents said. …
The lawmakers said encouraging private-sector investment in those communities could have a multiplying effect. The addition of a new grocery store, Tiberi explained, would create more jobs and attract more people to the neighborhood.
This is not the first go-round of the bill. It was introduced in the last Congress, but because it dealt with taxes, it was dead on arrival. Now that President Trump has made tax reform and underserved communities two of his priorities, the GOP is looking at “budget reconciliation,” or bypassing the 60-vote threshold required in the Senate to end debate on legislation and head to a vote. Now it’s just a matter of picking up support for the legislation.
