"Poor people are just as free to avoid taxes on their long-term investments in illiquid capital-intensive projects as millionaires and billionaires" is not a take I expected to see, but thank you HN for proving me wrong.
People cry tax avoidance, but I'm assuming these will MOSTLY be areas where no one and their mother would want to reasonably invest. Areas with little hope for the people there to establish themselves in a good life.
If this moves some money into these underdeveloped areas, after a 10 year stock market bull run, then great. Most of the investments will go to zero, but the ones that don't might have a good impact for the people living there.
If you look at the map, you'll notice areas with white hot housing and rental markets (2k+ rents, 600k+ floors of houses). See my other comment for a concrete example.
Even worse, the zones are chosen by governors and the rules for selecting them are extremely lax.
I know enough about the local politics of where I grew up to know that at least one of the OZs makes literally no sense and is 100% a kickback to a major gubernatorial donor.
some of the zones are legitimate opportunities. A lot of them -- and the ones most likely to attract investment -- make it patently clear that this is a low-risk give-away.
You won't find me arguing against the need for more investment in opportunity zones, or the social benefits of doing so. We don't need a redistributional giveaway to rich people to do so, of course.
Who else is going to do the investing then? The point of any investment is a return, and who would expect or choose a return from these areas compared to many other opportunities?
The government investing the money would be nice. Apparently they have a lot of money to invest, they just redistributed $2T to primarily rich people through the TCJA.
(I'm a socialist in part because of the market's inability to effect change, such as investment in OZs, which doesn't have a sufficient monetary reward but has significant societal reward. Some people call this a "market failure")
But why is that better? Why have a massive inefficient government spend a vast sum of money when instead it can just defer some tax collection, letting these investors take the risk and optimize for success?
I disagree that governments necessarily must be inefficient, but yes this is an area with some nuance. I could see myself being in favor of an incentivized tax structure for OZs, along with a highly redistributional tax system for income, wealth and equity, but I don’t think too many of the people who argue for the power of markets to incentivize investment of OZs are also in favor of the redistibutional part ;)
Do you have much exposure to how government operates?
Where money is being thrown around by government, in general, there are laws in place to make sure that money doesn't flow into the bureaucrats pockets somehow. But to do that, they add layers and layers of checks and processes. The side effect is that they're not very fast.
And then there's the issue of not having attracted the hungriest talent on average, due to not offering very good salaries, because of the whole avoiding looking corrupt thing.
And then there's the whole personal motivation of private investors to profit, whereas government investors have no such motivation (if they're not corrupt). So there's just no very good motivation to do a great job.
There's a whole slew of reasons they don't make very good investors relative to private investors.
Not saying that private investors are perfect, they're obviously not, and of course there are going to be outliers. And some portions of government funding work pretty well (I think the NSF's model of getting scientist review panels is a great one).
Inconsequential compared to how much the US Government spends in a single day, and how much of that is wasteful. We can fund a new Juciero every day and not notice.
Imagine if you weren't allowed to use a calculator without a $5,000 license and six months of training. Sounds absurd? Welcome to the financial world, where outsiders are frowned upon.
The market is highly regulated in large part due to the notion that "manipulation" occurs (spoiler: it does, but manipulation always fails on its own eventually and the crash is typically made worse by regulators). Restrictions are made on who can invest, when and how much to the point where it's not a surprise that average wage earners avoid doing so - most of the worthwhile options are only for millionaires or higher. No wonder so many think the markets don't work - they can scarcely be considered markets!
Allow people to be educated and learn how to handle their finances rather than being protected from all danger to the point of being locked out, and you'll have informed individuals capable of handling their own affairs. Let Johnny touch the stove to see that it's hot and he'll learn right quick!
Socialism just wants to save everyone from themselves without looking in the mirror and realizing how dysfunctional it is itself. Forced collectives self destruct; voluntary cooperation survives and thrives, but it takes effort and time instead of a quick fix.
>>Allow people to be educated and learn how to handle their finances rather than being protected from all danger to the point of being locked out, and you'll have informed individuals capable of handling their own affairs. Let Johnny touch the stove to see that it's hot and he'll learn right quick!
This is some extreme oversimplification of 1-human behavior and 2- how easy is it to teach people immediate need denial for long term benefit. No matter how many times you tell people the parable of the ant and the grasshopper, it's still just a story. It's not how the human mind works (generally).
On the inverse end, I could point out how every "self made man who didn't need help from nobody and just smarted his way to the top" was likely helped in countless circumstances that have nearly nothing to do with his direct actions. Humans are great at creating narratives, regardless of whether there is actual causality.
Socialism wants to save everyone from a biased, unfair, inequitable system, understanding that a herd is stronger than an individual and that spreading risk across the board means fewer catastrophic events for the individual. The goal is to lower the upper limit and raise the lower limit. It's not an attempt to pander to poor foolish baby people who can't do a finances for themselves, it's saying that there's no reason for a civil society to allow some to suffer debilitating hardships at the hands of a system they were forced into through circumstance alone while others reap unjust rewards. It's not perfect, but leaving "the free market (tm)" alone and not regulating leads to slavery and child labor and private paramilitaries protecting corporate kings as the past has shown.
Human behavior is quite simple - it's the magnitude of interactions that that make it appear more complex than it is.
I do agree that it is easier to be lazy and obtain instant gratification than delay it for great reward but it can be learned by anyone if the cushy safety net of socialism is removed. Everyone has something that motivates him to become greater than what he is now; it's just a matter of discovering what that is - often he has to find it himself. One-size-fits-all socialism destroys this freedom.
>every "self made man who didn't need help from nobody and just smarted his way to the top" was likely helped in countless circumstances that have nearly nothing to do with his direct actions
Correct: nothing happens in isolation. However, mindset greatly changes the likelihood of an outcome. Without being able to cultivate and learn outside of indoctrination institutions, the world would be static and soulless.
>The goal is to lower the upper limit and raise the lower limit.
This is the core: give those whom are lazy a cushy retirement and shackle people who dream big so they can no longer fly.
Slavery and child labor comes from power vacuums that are created by control freak communists/Marxists/socialists who keep things from changing and improving. The rest go along because change can be scary and we all want stability. A face of true evil is the deception that we all must be equal - we are not. We have borders, both conceptual and physical - doors on our homes and personal space that we want respected; yet socialism cries that borders are bad and we need to take care of everyone regardless of our own situation... and let's use other peoples' money to do it since we don't have any. Crabs in a bucket.
I know you mean well because I was in your shoes after the dot-com collapse. The difference is that I've seen the hypocrisy - there is no perfect system but socialism is a slow, agonizing death.
The article is about a tax break for people, not companies, so this should not affect any investment decision that companies make.
And, of course, the 401k/pension plan, or company that the 401k/plan owns, could easily invest in the OZ if they so desired, if it made financial sense separately from the individual tax break.
Filling out and finding ways to minimize taxes due to 1040 Schedule Ds, that regular feature of tax season that people making $50k/yr or less know and love.
