Lawmakers are voicing mounting concerns about a federal tax incentive, known as an “opportunity zone,” that is supposed to encourage investors to pump money into the nation’s poorest neighborhoods, the New York Times reported. Leading Democrats in the House and Senate have sent a flurry of letters demanding answers and action by federal agencies after recent New York Times articles detailed how wealthy investors and real estate developers, including those with ties to the Trump administration, are poised to profit on the initiative. Sen. Ron Wyden (D-Oregon) said he was introducing legislation this week that would eliminate hundreds of opportunity zones in relatively wealthy neighborhoods. Other lawmakers have written letters to Mnuchin and called for investigations by the Treasury Department’s inspector general and the Government Accountability Office. The tax incentive is supposed to help struggling communities by attracting new businesses, housing and other real estate projects. If investors with capital gains — profits on stocks, real estate or other assets that have increased in value — invest them in one of nearly 8,800 opportunity zones, they get a discount on their capital gains tax bill, as well as the potential to avoid any future capital gains taxes if the new investment increases in value. While the incentive has driven money into economically ailing cities including Erie, Pa., and Birmingham, Ala., much of the money has gone to projects that were already planned or being built in rapidly gentrifying neighborhoods in places like Houston, Miami and New Orleans.
