Bipartisan legislation calling for deferral of capital gains taxes if companies invest in poor communities
Big businesses could be taking an axe to poverty. Lawmakers on Capitol Hill are getting creative with a new bill that would defer capital gains taxes, and allow corporations to put that money towards impoverished communities.
"We’d see more hope in the eyes and the hearts of young Americans,” said Senator Tim Scott (R-SC).
Scott authored the Investing in Opportunity Act, which gives companies and individuals a deferral on their capital gains tax if they invest in “opportunity funds”, that would build up poor communities. Scott grew up poor in North Charleston, SC. He says this legislation would literally hit home.
"Keeping the people as the primary objective is my goal,” said Scott. "We’ll get through the legislative morass, we’ll get through the challenges that we face. But the only way to get there is to remember why we’re doing what we’re doing.”
The bill would allow companies to hold off on paying capital gains taxes for a period of time if the money goes towards these communities. The investment could also bring them a significant return on their investment. John Lettieri is the co-founder of the Economic Innovation Group, which played a big role in crafting the legislation.
"One of the fundamental keys is access to capital,” said Lettieri. "And unless we’re more experimental and more innovative in the way that we address that challenge, I don’t think we’re going to see the needle move in terms of the success in these communities.”
Questions remain as to whether the goal of this legislation is actually feasible, and beneficial for everyone involved.
Maria Foscarinis, executive director of the National Law Center on Homelessness and Poverty, says the plan could bring unwelcome gentrification, but overall, the pros outweigh the cons.
"Certainly getting the input of the community is really important,” said Foscarinis. "Identifying the top priorities and making sure that everyone benefits will be really important.”
Lettieri says businesses would have to be invested for a long time to see a big return, but he thinks it could take them to new heights.
"It’s connecting the dots,” said Lettieri. "Capital on the one hand that’s really passive, and a really active need all throughout the country in every state.”
Senator Scott says he’s confident this bipartisan legislation will pass. Senator Cory Booker (D-NJ) and Congressmen Ron Kind (D-WI) and Pat Tiberi (R-OH) worked with Scott on the bill.