By CultureBanx Team
56% of Opportunity Zones residents are minorities
There are 8,700 Opportunity Zones low-income census tracts
Image conscious billionaires are investing in low income ‘Opportunity Zones’ as a way to not pay taxes. This is the latest push for ultra-high net worth individuals to keep all of their coins while pretending to do charity work, as they exploit yet another tax loophole at the expense of urban communities.
Why This Matters: This is simply money chasing more money. Billionaires can reap extensive benefits including the ability to defer paying capital gains tax through 2026, after selling a company if they invest in these Opportunity Zones. Additionally, taxes on capital gains from investments in zones can be avoided, if the investments are held for at least 10 years.
There are 8,700 Opportunity Zones low-income census tracts, like in Silicon Valley’s backyard of Oakland, an area with a 28% black population. All of the areas have higher poverty and unemployment rates than the rest of the country and 56% of Opportunity Zones residents are minorities.
The new tax law doesn’t require detailed tracking of investments, meaning the program would likely benefit wealthy investors and raise rents without helping the low-income people living in the area.
Silicon Valley’s tech billionaires have long flocked to tax loopholes to try and avoid the IRS. However, there could be a downside to these Opportunity Zones where they could lose money. For example, if a person sells their company and puts the new $100 million bag, a capital gain into an Opportunity Zone fund that invests in real estate and the deal goes bad, all of the money will be lost.
Situational Awareness: Just last week the Treasury Department designed the rules for the Opportunity Zone program to give businesses enough flexibility and certainty to start making major investments. Venture capitalists are also studying these investment zones carefully and considering raising funds to invest directly into these areas.
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