On Friday, Trump again tried to tout his tax law’s opportunity zone tax break as a boon to low-income and minority communities. In reality, the tax break has only amounted to another handout to wealthy investors, and the Trump administration has even directly intervened to ensure bigger tax breaks for their friends and donors.
Mnuchin personally intervened to secure an opportunity zone tax break for a wealthy investor, fraudster and longtime friend.
New York Times: “Last year, after pressure from Mr. Milken’s business partner and other landowners, the Treasury Department ignored its own guidelines on how to select opportunity zones and made the area eligible for the tax break, according to people involved in the discussions and records reviewed by The Times. The unusual decision was made at the personal instruction of Mr. Mnuchin, according to internal Treasury Department emails. It came shortly after he had spent time with Mr. Milken at an event his institute hosted.”
The White House intervened to help a major inaugural donor win a lucrative opportunity zone tax break.
ProPublica: “In February 2018, as the selection process was underway, a top Michigan economic development official asked her colleague to call Quicken’s executive vice president for government affairs about opportunity zones. ‘They worked with the White House on it and want to be sure we are coordinated,’ wrote the official, Christine Roeder, in an email with the subject line ‘Quicken.’ The exact role of the White House is not clear. But less than two weeks after the email was written, the Trump administration revised its list of census tracts that were eligible for the tax break. New to the list? One of the downtown Detroit tracts dominated by Gilbert that had not previously been included. And the area made the cut even though it did not meet the poverty requirements of the program.”
ProPublica: “In the last few years, Gilbert, the 57-year-old founder of Quicken Loans and owner of the Cleveland Cavaliers, has also grown close to the Trump family. Quicken gave $750,000 to Trump’s inaugural fund. Gilbert has built a relationship with Ivanka Trump, who appeared at one of his Detroit buildings in 2017 for a panel discussion with him. And, last year, he watched the midterm election returns at the White House with President Donald Trump himself, who has called Gilbert ‘a great friend.’”
Some of the biggest beneficiaries of Trump’s opportunity zone tax break meant for low-income communities have included his family and advisers.
New York Times: “Among the early beneficiaries of the tax incentive are billionaire financiers like Leon Cooperman and business magnates like Sidney Kohl — and Mr. Trump’s family members and advisers. Former Gov. Chris Christie of New Jersey; Richard LeFrak, a New York real estate titan who is close to the president; Anthony Scaramucci, a former White House aide who recently had a falling out with Mr. Trump; and the family of Jared Kushner, Mr. Trump’s son-in-law and senior adviser, all are looking to profit from what is shaping up to be a once-in-a-generation bonanza for elite investors.”
Opportunity zone tax breaks across the country have benefitted wealthy developers while failing to help low-income residents.
Arizona Republic: “An Arizona Republic analysis of opportunity zones in Maricopa County found that while some of the areas could use help, others are thriving and likely would draw developers without the tax break. The costs and benefits of the program will be tough to track. Investors and builders aren’t required to publicly disclose whether they take the tax break. Mark Stapp, a real estate expert and director of the Masters of Real Estate Development program at ASU, questions whether what he calls an ‘ill-defined’ program will benefit the areas that need it most. ‘It has a big public cost with the taxes not collected, and no real requirement for public good,’ Stapp said.”
WNYC: “The new law has a provision meant to spur investment into underdeveloped areas, called ‘opportunity zones.’ The idea is to grant lucrative tax breaks to encourage new investment in poor areas around the country, carefully selected by each state’s governor. But Port Covington, an ambitious development geared to millennials to feature offices, a hotel, apartments, and shopping, is not in a census tract that is poor.”
Pew Trusts: “But change is coming to Elyria-Swansea in the form of a hotel and conference center, high-end office space and ‘luxury, urban-style residences.’ Investors in all three real estate projects could enjoy a hefty federal tax break for investing in a low-income neighborhood — even though it’s not clear whether such projects will help current low-income residents, or whether they’re the leading edge of gentrification that will eventually push longtime residents out.”