Families in Nebraska and all across the country are feeling the benefits of tax reform. Stories of salary raises, bonuses, and expanded benefits continue to make headlines in our own state and throughout the nation. But long before we had the once in a lifetime opportunity to institute meaningful change to our tax code, I was laying the groundwork by visiting with families, communities, small businesses, and companies across our state.
A common concern I heard was a lack of an opportunity to succeed. Families just wanted a fair chance to pay off their mortgage, save for retirement, or support their loved ones.
For far too long, a top-down tax approach hurt our economy. Hardworking parents were straining to balance the role of raising their children, or aiding their aging loved ones, with the stress of working long hours to provide a better life for their family. Meanwhile, families in economically distressed areas felt frozen in time. Many of these areas have seen little progress in their local economy since the Great Recession.
I knew once I arrived in the Senate that any opportunity to reform our tax code should be met with a targeted approach. We should enact policies that dig deeper into the specific challenges that working families face. And that’s exactly what we did.
This week I want to highlight another exciting part of tax reform that adopts this same clear-cut approach: Opportunity Zones.
Today, more than 52 million people live in economically distressed communities throughout the country. This accounts for over $6 trillion in potential capital gains. Families deserve to have access to this unrealized opportunity. Make no mistake, these communities do not suffer from lack of talent or innovation, they are simply underinvested.
Opportunity Zones will help restore hope for families in these struggling areas. Developed by my good friend, Senator Tim Scott from South Carolina, the effort uses tax incentives to spur long-term economic growth in some of our nation’s poorest communities.
In this ground-up approach, governors and local officials in each state can nominate 25 percent of their low income and high-poverty census tracts as Opportunity Zones.
To receive tax benefits, private investors must invest in these designated zones through an Opportunity Zone fund. Investors who contribute will not be required to pay capital gains taxes until 2026. The longer these companies keep the money invested in distressed communities, the less they will pay. In fact, after 10 years the investment will become tax-free. In Nebraska, 44 Opportunity Zones have been designated in areas like Omaha, McCook, Grand Island, Cozad, Burwell, Schuyler, North Platte, Lincoln, Scottsbluff, and Norfolk.
Those who have been working hard to catch a break need more opportunity, not more government. Opportunity Zones will eliminate barriers holding back the talent and ingenuity in these communities throughout the Good Life and America.
In the past, Americans have often looked overseas to invest in thriving markets. Now, after the benefits of tax reform, we can begin to reinvest right here at home. Opportunity Zones will identify areas where we can revitalize distressed communities through strong broadband access and new emerging technology. I look forward to working alongside our state and community leaders to bring in new investments that will bring growth in these local economies.
Thank you for participating in the democratic process. I look forward to visiting with you again next week.