2018 Bloomberg 50
Senator, South Carolina – Politics
Thanks to him, about 8,700 low-income census tracts are now designated as “opportunity zones,” and they’ve become the next big investing fad as Wall Street discovers the potential tax savings.
Last year, when Republicans rammed through a controversial tax package stuffed with big cuts for corporations and the wealthy, Scott’s contribution to the overhaul barely drew notice. He’d managed to codify an idea that Silicon Valley luminary Sean Parker and a coterie of lawmakers and policy wonks have been floating in Washington for years.
The main perks: Investors who fund businesses or real estate in these zones can defer and reduce taxes on capital gains from previous unrelated investments—and if they keep their money in the zones for at least a decade, they can eliminate taxes on the additional appreciation. Goldman Sachs Group Inc. is already investing near New York’s Long Island City, where Amazon.com Inc. recently announced it’s opening a major office, and other companies are setting up dedicated funds for the purpose, some seeking a half-billion dollars.
Treasury Secretary Steven Mnuchin has predicted that $100 billion in private capital could eventually flow into poor neighborhoods. When Scott toured some of the zones this year, his first stop was his childhood home of North Charleston, where his single mom raised him, working 16-hour days as a nurse’s assistant.
Now “communities that have not seen the type of economic recovery that the rest of the country has seen have a chance to be hopeful,” he said in an interview on Bloomberg Television in July. Yet as the final rules take shape, researchers and nonprofits are sounding alarms. They point out that investors could use the tax breaks for projects they would’ve pursued anyway—or that their projects might displace low-income residents, further speeding up gentrification. —Noah Buhayar