A New York state lawmaker has introduced a bill that would make President Donald Trump’s “opportunity zones” tax break less valuable to real estate developers.
The lawmaker, Senator Michael Gianaris, a Democrat, says he was outraged to learn Amazon.com Inc.’s planned office building in his Queens, New York, district would be located in an opportunity zone. That designation lets the e-commerce behemoth and others qualify for sizable federal and state tax breaks for building there. Amazon has indicated it won’t try to claim the break.
Opportunity zones were meant to spur development in poor areas. The Long Island City census tract where Amazon is settling is relatively wealthy, however, with median household income of almost $140,000, and is already in the midst of a development boom.
“What’s become clear to me as a result of the Amazon debacle is the program’s not ready for prime time,” Gianaris said in an interview.
The federal tax break was included in Trump’s 2017 tax law and was supported by a bipartisan group of U.S. senators, including Cory Booker of New Jersey, a Democrat, and Tim Scott of South Carolina, a Republican. For a limited time, investors who develop real estate or fund businesses in opportunity zones are able to defer capital gains on profits earned elsewhere and completely eliminate them on new investments.
A majority of states, including New York, chose to compound the effect of the new law by letting developers take advantage of a similar break on their state taxes. The top marginal capital gains rate in New York is 8.82 percent on income over $1.08 million.
Although most of the zones selected for the tax break meet the requirement that 20 percent of households live in poverty, an exception to that rule allows zones near the impoverished tracts to be included. Critics fear that these not-so-poor zones will attract the majority of new investment.