In 2017, Congress passed one of the most consequential pieces of legislation in the last quarter-century. When President Donald Trump signed the Tax Cuts & Jobs Act (TCJA), the law spurred economic growth the United States hadn’t seen in a generation. Wages increased, and unemployment decreased. Americans were able to cash their paychecks and go home to their families with more money in their pockets.
Now, eight years later, major TCJA provisions are up for renewal. Among them: Opportunity Zones, a successful, bipartisan piece of legislation that is transforming underserved communities in real time. Opportunity Zones have made an incredible impact across our nation.
The Opportunity Zone (OZ) initiative allows investors from all over the United States to invest their capital gains earnings in economically distressed communities where new investments can be eligible for preferential capital gains tax treatment. Instead of sitting idle in a brokerage or bank account, this money is put to work in communities that have not seen significant private investment for some time.
This pro-growth tax policy offers crucial incentives that do not cost American taxpayers a single cent. In 2017, this kind of policy may have seemed unbelievable to some within the Beltway. Despite the skepticism, OZs are actively transforming communities and creating economic opportunities for families in the poorest zip codes.
Erie, Pennsylvania may best exemplify the economic benefits and the tangible changes Opportunity Zones can create in a relatively short period of time. In 2018, the city’s downtown ZIP code, 16501, was named the poorest in Pennsylvania and among the poorest nationwide. However, through the potential of OZs, the stigma of Pennsylvania’s poorest ZIP code served as a springboard for investment in the area.
Shortly after TCJA was signed into law, a group of local residents recognized how Opportunity Zones could revitalize the city. Major employers, local universities and other organizations partnered to provide initial financial backing to form the Erie Downtown Development Corporation (EDDC).
To date, EDDC has leveraged more than $115 million in private investment into downtown Erie, which has built 108 new fully occupied residences, revitalized and created more than 100,000 square feet of new commercial space, and established space for 25 new businesses. Overall, $400 million of long-term capital investment is at work, breathing new life into Downtown Erie.
These investments have a proven track record of revitalizing small businesses and residential areas while fostering innovation in technology and manufacturing — an industry where South Carolina excels. Projects like the South Carolina Technology & Aviation Center (SCTAC) have generated over $6.1 billion in investments and created more than 18,000 new jobs in the local community. This further underscores the significance of Opportunity Zones, which have been and will continue to be impactful.
Additionally, Opportunity Zones have played a significant role in assisting the revitalization of previously overlooked communities, transforming them into economic powerhouses. In Oconee County, South Carolina, investors transformed a textile mill built in 1875 along Lake Hartwell into 197 new residential apartments. The project also incorporated retail and recreational amenities, including the restoration of the historic dam and the creation of public green spaces and trails.
Nationally, Opportunity Zones have generated $89 billion in private investment across more than 5,600 designated communities, and this investment spurred the creation of over 500,000 jobs in the first two years alone. According to a report released in March by the Economic Innovation Group (EIG), a bipartisan public policy organization based in Washington, D.C. The legislation also has a far-reaching impact — approximately one in 10 Americans live in an Opportunity Zone. That number could soon grow.
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The EIG report also indicates that OZs “caused an increase of 313,000 new residential addresses (not counting units currently under construction) in designated communities from Q3 2019 to Q3 2024 – roughly doubling the total amount of new housing added to these communities over that period.”
Moreover, the Council of Economic Advisors found that the Opportunity Zone designation alone caused a 3.4% increase in home values in these areas, which translated to an estimated tens of billions of dollars in new wealth for the Opportunity Zone residents who own their homes.
By empowering the private sector and cutting red tape, Opportunity Zones enable projects to move more efficiently and at a lower cost while simultaneously addressing one of the most pressing needs in low-income communities – quality affordable housing.
From the very start of the 2017 tax law, we knew the Opportunity Zones initiative would be a gamechanger. It was made for shovel-ready projects in neighborhoods that needed the help the most. As we look ahead to 2025, the future is bright in places like Erie and Oconee County. The EDDC is preparing to break ground on another $22 million project, which includes 37,000 square-feet for commercial office and retail space.
However, if Congress fails to extend TCJA and Opportunity Zones provisions expire, we could see projects years in the making completely upended overnight, along with the largest tax hike in modern history.
It’s critical that Congress extend, expand and make the 2017 tax cuts permanent so working families, small businesses, and communities nationwide can continue to receive the benefits of this legislation – and tax cuts at large – for years to come.
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Republican Tim Scott represents South Carolina in the United States Senate. He is author of the book, “America, a Redemption Story: Choosing Hope, Creating Unity.”
Secretary Scott Turner leads the U.S. Department of Housing and Urban Development. He previously served as executive director of the White House Opportunity and Revitalization Council, where he championed Opportunity Zones during the first administration of President Donald J. Trump.