President Donald Trump’s “opportunity zones” will benefit one of the president’s most disliked companies: Amazon. Amazon announced earlier in the week that they will be developing a new, New York City headquarters.
The headquarters will be developed in a “opportunity zone,” which is a federal zone that was created under Trump’s tax overhaul. Amazon will benefit from capital gains tax breaks and save potentially millions of dollars by investing in the area which is known for low-income and high poverty rates.
Residents of New York question these zones, specifically Long Island City, which has high income rates. The area where Amazon plans to develop their building has a median household income of $130,000, and before the tax overhaul, new buildings were already being constructed in the area. Poverty rates in the area are also half of what they are in the city, on average, yet Amazon, the world’s largest retailer, will benefit from tax breaks.
Billions of dollars in investments have already poured into the surrounding areas, leaving many residents questioning why Long Island City is one of the 8,700 zones across the country.
Amazon also announced plans to build headquarters in both Nashville and Crystal City, both of which are not in these tax-beneficial areas.
Amazon may not take advantage of the tax breaks, and officials have declined to comment on the matter. Investors have praised the move as Amazon expects to add 25,000 jobs which will help build up the surrounding area.
The move to reduce taxes in the area comes at a time when the IRS has targeted companies overseas, attempting to collect $7 billion in overseas taxes in 2014 alone.
Investors claim that the move is a good choice for Amazon and the city with plans of new housing developments in the works. Developers are eying new developments which looks better on paper with Amazon’s headquarters in the same neighborhood.
Amazon is also seeking tax breaks and grants in New York which will come out to $1.5 billion, the highest in the state’s history.
Opportunity Zone projects, like the one Amazon’s headquarters will be in, will allow Amazon to benefit from several tax options. One is that taxes can be deferred on gains up to 2026, and if investors do not cash out go the investment, they can exclude 15% of the gains from their taxes. Further appreciation on the gains can be excluded if investors hold on to the investment for a decade.
