Lawmakers on Monday hailed an aspect of the controversial federal tax-reform legislation with broad support in the state: the recently created Opportunity Zones program.
Created as part of the federal Tax Cuts and Jobs Act, passed in late 2017, the Opportunity Zones program is aimed at attracting private sector investment into economically “distressed areas.”
The United States Treasury approved zones across 75 New Jersey municipalities, out of 169 towns the Murphy administration submitted in March for consideration.
Gov. Phil Murphy, along with Sen. Cory Booker, D-NJ, spoke of the program during a Choose NJ event at the Rutgers-Newark campus.
“The opportunity for one plus one to equal three moments are ripe, up and down the state,” Murphy said.
A company has to invest at least 90 percent of their capital into a growth zone, and to make ensure they keep the investments grounded in the community long-term, the tax deferral is dolled out in staggered phases over a period of seven years.
The basis of the initial investment is increased by 10 percent if the investment is held by the taxpayer for at least five years. Another 5 percent is given for the deferral if the investment holds for at least seven years.
If the investments stick around in the community for 10 years, the company gets a full tax deferral of their investment.
“The capital you attract to New Jersey – I think will bring billions of dollars of new investment into our state,” Booker said.
A majority of the communities are in urban areas, Murphy said, but a number of rural communities were included in the mix.
“This is a home run though,” Murphy said. “I tell you, if this had been the entire tax bill we would have been celebrating.”
The state Department of Community Affairs will be operating the program, Murphy said.