A Trump administration tax break for real estate also saves investors money on city and state taxes in New York, to the dismay of some Democrats and interest groups.
More than two dozen groups are now seeking to undo New York tax breaks piled onto the federal Opportunity Zone program.
Unions including New York State United Teachers and Communication Workers of America, and nonprofits such as Reinvent Albany, the Fiscal Policy Institute and the Coalition for Economic Justice on Monday endorsed a measure to decouple New York tax codes from the program: the Opportunity Zone Tax Break Elimination Act sponsored by Queens state Sen. Michael Gianaris.
Opportunity Zones were created by Republicans’ 2017 tax overhaul and let real estate developers and investors defer or eliminate capital gains taxes by funding projects in any of 8,700 zones across the country.
They can also save on capital gains taxes paid to New York, where the tax code closely tracks the federal one, as is the case in most states.
If the bill passes, New York would join North Carolina, California, Massachusetts and Mississippi in separating the state tax codes from the Opportunity Zones program.
The three-year-old program purports to uplift low-income communities, but critics say the only thing it does for sure is save developers money. Opportunity Zones were designated to a number of areas where development was already occurring and, according to detractors, provide benefits to projects that would have happened anyway.
For example, a census tract on Manhattan’s Far West Side, where luxury developments have sprung up in recent years, was designated as an Opportunity Zone. So was a swath of Long Island City, which was booming at the time.
“Opportunity Zone subsidies cannot be justified in the best of times, so there is no reason why New York should continue forgoing precious tax dollars during a historic budget crisis,” the opponents said in a memo.
The memo cites a report from the Citizens Budget Commission which projects the program could cost New York City and state as much as $31 million and $63 million a year, respectively. (The amounts represent about $1 for every $3,000 in the city and state budgets.)
Other labor organizations that supported the memo include health care workers union 1199SEIU, Professional Staff Congress/CUNY, food workers union UFCW Local 1500, and the Retail, Wholesale and Department Store Union.
In addition, nonprofits such as Nobody Leaves Mid-Hudson, subsidy watchdog Good Jobs First, Institute on Taxation and Economic Policy, and Northwest Bronx Community & Clergy Coalition supported the memo.
President Joe Biden has said he intends to keep Opportunity Zones but add transparency measures to see if they are actually helping low-income people.
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