Opportunity Zones Open the Door to More Rip-offs of the Poor

New Orleans    The Trump-McConnell-Ryan tax giveaway of 2017 is a bad penny that just keeps coming up again and again.  Although it was a stupendous tax break for corporations and the rich, the president tried to disguise its real purpose by claiming it would give working- and middle-class taxpayers a break.  Headlines abound now about unhappy tax filers who are shocked at the lower level of their refunds and the denial of longstanding deductions.  High property tax states on each coast are still screaming as well.

Unfortunately, that’s not even all of the bad news.

The act included a provision creating “opportunity zones” that provided an additional tax break for investments in areas that were economically hard-hit.  As desperately as poor and depressed areas need new opportunities, once again, as these zones are designated by state governors, they are being diverted to benefit investors and real estate developers instead.  With a real estate promoter, speculator, and sometime developer as president, why are we surprised, no matter how cynical and corrupt this distortion is becoming.

Financial firms are creating special pools for investors to get-rich-quick or probably more accurately keep-rich by putting money in these funds and harvesting the tax benefits while they wait for the projects’ payoffs.  Even some business observers are noting that the program will largely add additional tax savings to projects that were already in development and under any circumstances would have happened anyway.  A legion of others examining the political lobby and the determination of the zones note that they are unlikely to benefit the poor and in fact in many cases will displace those very families by accelerating gentrification.

Equally unsurprising is that much of this idea can be credited to the same tone-deaf, libertarian business-myopia of Silicon Valley since it originated in a supposed think tank funded by tech maven Sean Parker, originally of Napster, then Facebook, and other projects.  In typical tech fashion there is no accountability, no reporting requirements, no cap on the amount of benefits allowed each year, and, this hurts to say, no requirements that local residents benefit.  In fact, if the investor sticks with the project for ten years, they would owe no capital gains on any profits ever making this a super sweet deal for them, rather than the lower income and depressed communities meant to benefit.

In Louisiana for example, much of the Central Business District is now a zone in New Orleans, as is all of downtown Baton Rouge as is “parts of the city’s MidCity corridor, which has in recent years attracted a rush of investment,” according to the The Advocate.  Their reporting also found that the undeveloped area near the New Orleans convention center and an old power plant, both owned by big time local real estate and hotel operators.  Of course, none of these qualifies as a low-income area, but there is a provision in the tax giveaway law that allows some areas that are “contiguous” to also be designated.  The policy director of the Greater New Orleans Fair Housing Action Center, Maxwell Ciardullo, noted to The Advocate that developers “could bring mixed-income buildings with some affordable and some market-rate housing in areas where some residents are being displaced.  They also could bring luxury apartments.”

Since there’s no accountability and no requirement that the residents’ benefit, let’s be honest, developers and investors can do any damn thing they feel like doing and be subsidized by all of us as taxpayers while they walk back and forth to the bank over and over, ripping off lower income and economically distressed area for their own greed and benefit.


The Poor Need Cash

New Orleans       Other countries are increasingly getting the message:  the poor need cash.  It’s not enough in the lowest income categories to stake a claim on education, training, or jobs, especially low paying jobs inadequate to support families.

Africa’s Tanzania’s welfare scheme is called the Productive Social Safety Net and provides at about $13 per month.  Ethiopia’s program was only in the rural countryside, but has now expanded to the cities as well.  From 2000 to 2015, the countries of sub-Saharan Africa launched an average of 14 new programs per year, up from seven per year between 2001 and 2009.  Brazil saw huge gains with its Bolsa program of cash incentives to the poor.

Admittedly, these programs are meager in comparison with European social service provisions, but even some of the weakest economies in Europe still realize that cash is king for the poor.  Italy is now guaranteeing that its poorest will at least have the equivalent of $10,640 per year by topping off whatever income or benefits up to that and investing almost $9 billion to do so.  Even some policy makers and legislators in the United States are reckoning with the problem of cash for the poor as technology and corporatism try to force customers to handle their point-of-sale costs by eliminating cash.  Cities like Philadelphia and states like New Jersey are concerned that banning paper money amounts to discrimination and are passing laws to prevent cashless stores.

Recently, I have started noticing this more for two reasons.  First, I lost my credit cards going through a TSA line on way to Germany, Albania, Bulgaria, and Ireland recently, and had to depend solely on cash in foreign countries, heightening my awareness.  More seriously, I read a painful and jarring book on my travels, $2.00 a Day:  Living on Almost Nothing in America by Kathryn Edin and Luke Shaefer.  After fifty years of organizing lower income families, the book didn’t tell me anything new as much as it was a vivid reminder at how little some things have changed and even worsened for the very poor during this period, especially after President Clinton’s so-called welfare reform.

One point that was inescapable though was how badly the very poor, living on little or nothing, are desperate for cash and the lengths that they are forced to go in order to obtain it in a period of declining to nonexistent cash welfare benefits.  Edin and Shaefer are truth tellers so there’s no sugar in this coffee.  They compare how much the discount rate is for bartering food stamps for cash in rural areas as opposed to cities.  This is real life, and it hurts.  Yes, it’s illegal to sell food stamps, but it’s a double bind for the very poor, if they have to have cash for utility bills or school clothing, it also means that they have less food with the increased risks.  Their stories of informal labor and “special friends” remind me of my days organizing with welfare rights when the ladies used to talk about the men who “brought them groceries” in exchange for tender favors.  The very poor have to do what has to be done in order to survive.  That’s not a social welfare system but a survival mechanism, and a scandal for the world’s richest country.

Perhaps even more heartbreaking and enraging for me to read was their report that the obstacles to applying for and receiving what is left of cash welfare through the TANF program are now so high in most states that many of the very poor believe that either welfare no longer exists or it is not worth the time and trouble to apply because of the constant rejections.  In the war against the poor that just adds more numbers to the body count.