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Distressed Communities as “Opportunity Zones”

The new tax law created a novel approach to assisting low-income neighborhoods by allowing some to become opportunity zones. Investing in these zones will allow investors to postpone the tax liability accruing from stock-sale gains by placing the gains in different assets within the zone. These areas are to be proposed by the states, but approved by the Treasury Department. Earlier this month, the Department announced the locations of the first 18 opportunity zones. Some observers have expressed concern that states would propose neighborhoods that are already gentrifying, which would skew the benefits of the program toward investors more than the community. However, an analysis by the Brookings Institution concludes that, on balance, the states have selected neighborhoods that are truly distressed.