Only the Rich Can Play by David Wessel

Author:David Wessel [WESSEL, DAVID]
Language: eng
Format: epub
Publisher: PublicAffairs
Published: 2021-10-05T00:00:00+00:00

CHAPTER TEN

Portland: Tax Breaklandia

I STARTED MY QUEST IN PORTLAND, OREGON, FOR SEVERAL REASONS. In some other states, reporters found suggestions of political favoritism or corruption in the zone picking. There is no sign of that in Oregon. Economically, Oregon isn’t as poor as states in the Deep South nor as rich as states in the Northeast. It has an urban corridor along I-5 with large rural areas to the east. It has poor parts and rich ones. On average, the census tracts Oregon chose as OZs were neither the most nor the least economically distressed among those eligible; they were about average.1 So, while Oregon is politically left of center and whiter than most states, it seemed a good laboratory to test what Opportunity Zones are doing.

Shortly after the Tax Cuts and Jobs Act passed in December 2017, Chris Harder, director of Business Oregon, the state’s not-so-subtly named economic development agency, began seeing references to OZs on Twitter and elsewhere. He asked his government affairs deputy, Nick Batz, to look into them. “It creates domestic tax havens,” Batz replied in an email that captured the essence, if not the details. “If I’m an investor, I park my capital gains in the safest company I can find in one of these zones and wait ten years to withdraw… tax free.”2

After New Year’s, the email traffic around OZs grew heavier. The office of Governor Kate Brown, a Democrat, inquired: What is this program? Is this something we should be caring about? The White House was sending emails to governors’ offices promoting OZs, but Harder and others wondered: Is this just a talking point for the administration or is this a program?

Over the next few months, however, Harder, Batz, and the governor’s office determined that OZs were a real program—and one that demanded extraordinarily quick decisions. The US Treasury told Oregon that 366 of the state’s 834 census tracts were eligible to be OZs. Brown had until March 21 to tell the Treasury which 86 tracts the state wanted to designate.

The state would have to make these determinations without really understanding what the brand-new program was. On February 2, Nick Batz sent the governor’s chief economic adviser, Jason Lewis-Berry, a five-page memo outlining the basics. “Nothing really like this has been tried before,” he wrote in an email. “It remains to be seen how quickly and effectively capital can be mobilized.… At present, there are uncertainties about specific mechanics that may not be resolved for at least several months.”3

Illustrating just how baffling OZs were to governors’ offices, Batz (correctly) said the law offered tax breaks for investments in businesses as well as in “tangible property,” but (incorrectly) predicted the tax incentives “may not be amenable to common models of strictly real estate re/development.”

Early afternoon the next day, a Saturday, the governor’s chief of staff, Nik Blosser, emailed Lewis-Berry: “The biggest question I have is how much investment this is likely to incite—I’m assuming Business Oregon is doing this analysis.”4 (They weren’t. Even a

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