Key congressional Democrats are ramping up their oversight efforts over a program created by President Trump’s tax-cut law that was designed to increase investment in low-income communities.
Trump’s 2017 law created the “opportunity zone” tax incentive, which provides capital gains tax breaks for those making investments in designated economically distressed areas.{mosads}
Lawmakers on both sides of the aisle have expressed interest in boosting reporting requirements in order to evaluate the effect of the opportunity-zone provision on low-income communities. And Democrats have also been raising concerns about allegations of political interference into the program.
House Ways and Means Committee Chairman Richard Neal (D-Mass.) and Senate Finance Committee ranking member Ron Wyden (D-Ore.) announced Wednesday that they have sent a letter to Treasury Secretary Steven Mnuchin, requesting more information about the department’s decision to designate Storey County, Nev., as an opportunity zone after the department previously determined that the area wasn’t eligible.
The letter comes after The New York Times reported late last month that Mnuchin instructed the Treasury Department to grant Storey County the opportunity zone status after spending time with former “junk bond king” Michael Milken, who co-owns a company that holds land in the county.
Wyden and Neal wrote in their letter that the Times article “suggests that favoritism and political pressure may have played a role in the designation of ‘qualified opportunity zones’ in Nevada.” Treasury has called the Times’s article inaccurate, saying Mnuchin didn’t know about Milken’s investments in Storey County and that the Treasury Department considered designating the area as an opportunity zone at the request of Nevada politicians.
Additionally, Wyden, Neal and two other key Democrats sent a letter to the Government Accountability Office (GAO) this week requesting that the office issue a report that includes an analysis of the census tracts designated as opportunity zones, an evaluation of the implementation of the provision by the Treasury Department and the IRS, an evaluation of the controls the IRS has in place to make sure that investors are in compliance with the opportunity-zone provisions, and an evaluation of Treasury’s ability to report on the effectiveness of the program.
The lawmakers also asked GAO to issue a subsequent report when more data becomes available that describes characteristics of opportunity zone investments; describes the effect of opportunity zones on federal and state taxes; and examines the effect of the opportunity zone provisions on economic development, job creation, housing and other factors.
“Given the breadth of the Opportunity Zone incentive, the lack of reporting requirements under current law, as well as the high levels of reported interest from taxpayers, we believe it is critical that the Government Accountability Office (GAO) assist Congress in evaluating the incentive and monitoring its implementation and outcomes,” the lawmakers wrote.
Besides Wyden and Neal, the letter was also signed by Rep. John Lewis (D-Ga.), the top Democrat on the Ways and Means Committee’s oversight subcommittee, and Sen. Cory Booker (D-N.J.), a presidential candidate who was also one of the authors of standalone legislation on opportunity zones prior to the 2017 tax law.
A GAO spokesman confirmed that the office received the lawmakers’ letter.
Wyden also introduced legislation Wednesday that would impose reporting requirements for funds that invest in the zones, tighten rules to ensure that the tax breaks go productive new investments and terminate areas designated as opportunity zones that are not low income.
A bipartisan bill to impose reporting requirements on funds that invest in opportunity zones was rolled out Wednesday by Reps. Ron Kind (D-Wis.), Mike Kelly (R-Pa.) and Terri Sewell (D-Ala.).
Treasury and the IRS last week released a draft form to collect information about opportunity zone investments.