Finance

GOP senator blasts Dem bills on 'opportunity zones'

Sen. Tim Scott (R-S.C.) on Wednesday blasted legislation from Democrats aimed at imposing guardrails on the "opportunity zone" program created by President Trump's 2017 tax law, arguing that the legislation would make the incentive less effective.

Scott, a member of the Senate Finance Committee who was a leading proponent of getting the incentive included in the tax law, took aim at bills from Senate Finance Committee ranking member Ron Wyden (D-Ore.) and House Majority Whip Jim Clyburn (D-S.C.). 

"Make no mistake, Congressman Clyburn's legislation, which is very similar to a bill introduced by Senator Wyden in the Senate last week, will needlessly punish low-income communities who are hoping to use Opportunity Zones to transform areas left behind," Scott said.

The opportunity zone program provides capital gains tax benefits for investments in designated economically distressed areas. 

The incentive is aimed at helping to revitalize low-income areas, and the goals of the program have bipartisan support. But Democrats have been increasing their scrutiny of the program in recent weeks, amid concerns that the program is providing more of a benefit to wealthy investors than to low-income communities.

Clyburn, along with Reps. Alma Adams (D-N.C.) and Lacy Clay (D-Mo.), rolled out legislation on Wednesday that would prevent investment in "sin list" businesses, such as casinos, from being eligible for the incentive, terminate opportunity zones that are not low-income and tighten rules to ensure that the tax breaks go to new investments. Wyden has introduced similar legislation.

"This program needs to be tweaked if it is to accomplish its stated purpose, and this legislation makes the necessary reforms to ensure it is making an impact in the communities that need investments the most," Clyburn said in a news release earlier on Wednesday.

But Scott argued that his office has done initial research that found that the legislation would sunset multiple opportunity zones with a child poverty rate above 30 percent and multiple zones with general poverty rates above 25 percent.

"While certain, mainly Democratic, Governors across the country chose their states zones in a way I do not agree with, taking a broad brush and sunsetting opportunity for hundreds of communities across the country at once is unacceptable," Scott said.

Scott also argued that the vast majority of zones didn't show signs of gentrification at the time they were nominated. Additionally, he argued that because Wyden and Clyburn's bills would classify health clubs as sin businesses that wouldn't be eligible for the tax incentives, the bills could mean that YMCAs and after-school programs on physical education could be ineligible.

"Yet again, we are left with the impression that those writing these bills simply have failed to understand both the complexities of improving opportunity in low-income communities and the goals of the Opportunity Zones initiative in the first place," he said.

Scott said he is interested in working with Democrats to making improvements to the opportunity-zone program, noting that he has offered bipartisan legislation with Sen. Cory Booker (D-N.J.) to require the Treasury Department to collect data about the impact that funds invested in opportunity zones are having on underserved communities.

"Instead of trying to take down Opportunity Zones because of their distaste for President Trump and our successful tax reform package, I invite Democrats to come to the table and work together on a path forward," Scott said.

Wyden spokeswoman Ashley Schapitl said in a statement that the senator's bill "would terminate just 2 percent of Opportunity Zones that are not low-income, allowing states to designate replacements that better meet the intent of the program." 

"Senator Wyden's goal is to ensure that this incentive spurs new investments in truly low-income communities, rather than provide windfalls to the wealthy and connected at taxpayer expense," Schapitl said. "There is overlap between Senator Wyden and Senator Scott's legislation, and he's eager to work with Senator Scott to get a bipartisan bill done."

The spokeswoman added that the ban on health clubs is designed to target facilities such as luxury spas, not YMCAs.

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