Sen. Tim Scott: New tax law will spur opportunity in distressed communities
Poverty has long been one of the most challenging social crises of our time. Despite good-intentioned efforts to generate positive change, currently 52 million Americans continue to face the dire circumstances of a lack of jobs, education, and the confidence that things will get better.
I will be at the White House on Wednesday with President Trump, administration officials and community leaders to discuss the Investing In Opportunity Act. The IIOA, which was included in last year’s tax reform package, seeks to direct trillions in capital gains to distressed communities in every state.
Even with the healthier state of our economy and more promising job market, the unfortunate fact remains that there are neighborhoods scattered throughout every one of our 50 states where the hope of achieving the American Dream has all but disappeared. Today, too many individuals remain trapped, and families stand on the verge of settling for a new norm that is inconsistent with the prosperity associated with our great nation.
In South Carolina we have seen some amazing growth and development over the past several years. Companies are moving in, they’re creating good-paying jobs, and communities are feeling the effects of a promising economic tide. But this isn’t the reality for everyone. In fact, about 30% of our population is considered to be living in a distressed zip code. That’s tens of thousands of people that have simply been out of reach of the positive changes that have swept other parts of our state.
So the question then is — how do we spread opportunity to every corner of every community across our nation? The solution isn’t nested in another tax-payer funded government program or initiative that fails to get to the root of the problem, but rather public-private partnerships that encourage long-term investment and continued success.
A few years ago in Spartanburg, S.C., I was able to personally see the results of a public-private partnership called The Northside Initiative, a multi-million dollar partnership that leveraged resources to inspire business development, modernized housing, and job creation. The outcome has been outstanding: crimes dropped by 81% in five years, and 150 dilapidated properties have been turned into a food hub, Mixed Housing Model Block, and other new housing opportunities.
This Northside Initiative’s model is a classic example of how public-private partnerships can have a tremendous impact on our most financially disadvantaged communities. It’s simple math. According to the DRI Fund, at least $2 trillion in unrealized capital gains is sitting on the sidelines, and nearly a fifth of our population is living in communities devoid of opportunity and promise. Under the IIOA, in exchange for a lower capital gains rate that decreases based on the length of the investment, investors can put those unused dollars to work in a meaningful and productive way that will grow jobs, inspire entrepreneurship, and improve the local economy.
To make sure the zip codes most in need are the ones that reap the benefits of this new provision, all 50 governors will designate “Opportunity Zones,” meaning governors and local leaders will have the opportunity to identify key qualifying locations that stand to gain the most from this initiative. At the U.S. Conference of Mayors meeting last month local leaders expressed their excitement for this plan, state development offices across the nation are working hard to nominate Opportunity Zones within their area of jurisdiction, and scores of community development groups have already expressed eagerness to find out how they can get involved.
To create a brighter tomorrow for communities that have been left behind, we need to capitalize on the private-sector resources that can help boost these areas in ways we haven’t seen before. This is what IIOA will accomplish. I am excited about the far-reaching impact this program will have for folks looking for a hand up, and a brighter future.