GOP tax bill provision aims to create `opportunity` in distressed communities

Much has been said about the tax reform bill over the last couple of months, but few have noticed a provision that gives states a new tool to revitalize struggling communities.

Right now, more than 40 million Americans live in poverty, even though spending on poverty programs has increased by more than 260% since 1965. At the same time, American investors hold trillions of dollars in unrealized capital gains. The idea in this new provision is to create a simple mechanism and incentive for this money to flow into distressed local economies through development projects and business investments.

Here’s how it works: Any governor who wants to take advantage of the provision can designate 25% of a state’s distressed areas as Opportunity Zones. At the same time, investors can put their money in newly created Opportunity Funds. Managers of Opportunity Funds would then be able to invest in designated areas, and investors would receive tax-advantaged rates on their earnings. An important note: Tax benefits only come if investments remain in place for a minimum of five to 10 years — providing a steady foundation for growth...