Wealthy Investors Steer Billions Toward New Trump Tax Break
(Bloomberg) — The controversy keeps mounting over a new tax break for investing in poor U.S. communities. But investors keep piling in.
“It’s been a pretty steady rise,” said Michael Novogradac, the tax adviser’s managing partner. But the size of the jump in the most recent survey “did surprise me,” he added.
Once heralded as a novel way to help distressed parts of the U.S., opportunity zones are now being slammed as a government boondoggle. The perks — included in the federal tax overhaul that President Donald Trump signed in late 2017 — are being used to juice potential investment returns in luxury developments from Florida to Oregon. Several reports have shown that politically connected investors influenced the selection of zones to benefit themselves.
While Congress weighs changes to the law to boost transparency and ensure the poor benefit, the Trump administration has been working to get more money flowing. Last month, the Treasury Department issued a final set of rules about what will qualify. Some investors had held off on committing to funds until the government provided more guidance.
“We expect even greater levels of investment in the coming weeks and months thanks to the additional clarity provided by the final regulations,” Novogradac said in a statement.
The group’s tally — now at $6.72 billion — is also probably an undercount. Funds aren’t required to say publicly that they’re claiming the tax breaks, let alone how much they’ve raised. Many wealthy individuals and corporations have formed opportunity funds that aren’t seeking outside capital and have remained under-the-radar.
“It’s reasonable to estimate that the actual dollars raised to date are double or triple $6.72 billion,” Novogradac wrote in a separate blog post.