A new federal program pitched as a way to aid low-income communities is ramping up across Louisiana, but after a political scramble to make various struggling areas eligible for the tax break, it's investors and real estate developers who are starting to reap the benefits.
Last year, more than 150 census tracts in Louisiana were designated as Opportunity Zones under a provision in the 2017 tax-cut bill designed to encourage investment in economically hard-hit areas.
Basically what this says is the Trump tax cut bill was turbocharged with "opportunity zone" breaks for your local electeds to hand out as patronage to real estate developers who will be rewarded for building more nice things for rich people.
Another potential hiccup, according to tax-law analyst Samantha Jacoby of the left-leaning Center on Budget and Policy Priorities, is that the program does not include any requirements that local residents benefit from the investments.The "zones" are determined at the state level which means that John Bel Edwards's LED got to cut hundreds of deals for Cedric Richmond and countless local officials. The bankers and developers connected to Cedric or to this or that city councilperson or mayor swarmed in to take advantage. Joe Jaeger is here. So is Sidney Torres. And.. well... here we go with another one of these stories.
Wealthy people, not poor people, are the ones who have capital gains, she noted. And areas that are already attractive to investors are getting the benefit, such as the New York City neighborhood where Amazon has announced its intention to build a new headquarters.
"While the new tax break enables investors to accumulate more wealth, it includes no requirements to ensure that local residents benefit," said Chuck Marr, a colleague of Jacoby at the CBPP, where he focuses on federal tax policy.
When the law was being crafted, Tulane’s Lalka said it was pitched as a way of enticing people to invest in start-ups and small businesses. But since it’s been enacted, real estate has dominated the activity surrounding the program.
Let's make lots of money.
I know this isn't exactly shocking or anything but I do like to remind people just how little incentive any elected person has to do anything except enact special favors for the wealthy. It's one reason, even the feints they make at providing relief for people being squeezed by rapacious capital are careful to treat only the symptoms and not the disease.
Specifically, the council's resolution asks the Legislature to consider a constitutional amendment to help residents whose tax bills have doubled in one year, who have lived in the city since 2004 and who have low to moderate incomes. Council members said the idea is to help people who have seen their home values and resulting property taxes skyrocket due to pricey renovations on nearby homes.Maybe if Jay Banks weren't so careful not to hurt the house flippers, we wouldn't be stuck in a cycle of figuring out what tax credit we have to grant to middle class homeowners in order to mask the damage done by the massive privileges granted to the plutocrats.
Often, investors will buy an old property, pour in tens of thousands of dollars of renovations and quickly sell it for a profit, a practice commonly known as house flipping. The proliferation of short-term rentals in the city has made such flipping more common.
The council's proposal "doesn’t hurt anyone who has paid half a million dollars for a house," said Councilman Jay H. Banks. "But it also does not penalize people who have been living in neighborhoods their whole lives, who haven’t ever seen half a million dollars."
It's a cycle that's about to start again, by the way. I'm not sure how many people caught Banks's comments during the last round of bickering over short term rentals. Neither paper quoted him on this point but, at the January 10th Council meeting, Banks said he no longer believes STRs are killing affordable housing. He even suggested creating... yep... "opportunity zones" ...where they would be more liberally permitted in residential areas he, or whichever developers have his ear, might deem in need of a little investment.