How US Opportunity Zones Really Work

tl;dr: Investors can dodge taxes by parking their capital gains in ~6,400 designated low-income census tracts. Idea After the 2008 financial crisis, investors retreated from risky markets (e.g. distressed towns) and chased trusted collateral (e.g. coastal real estate). Affluent communities recovered while poor towns starved of capital. Changes in jobs/businesses by community prosperity quintile, 2011-2015, via EIG. Meanwhile, US investors sat on trillions of dollars of unrealized capital gains. Selling a stock triggers taxes, so people held on for opportunities that (A) offset their realized capital gains and (B) make more money. In 2015, EIG suggested waiving taxes for capital gains deployed into a capital-starved community, i.e. an "opportunity zone" (OZ). The 2015 paper was co-authored by Kevin Hassett (Trump's Council of Economic Advisers chair) and Jared Bernstein (Biden's Council of Economic Advisers chair). Deferring a capital gain typically only works when trading real estate…