[This commentary first appeared in The Source Weekly]

Until recently, it looked as though a tax subsidy for wealthy investors would finally have its day of reckoning. Oregon House Bill 4010 sought to pare back and make more transparent the so-called “Opportunity Zones” tax break. But a walkout by Republican lawmakers over climate change legislation imploded the 2020 legislative session, burying HB 4010 along with other important bills.

The untimely death of HB 4010 derailed what would have been the first real review of this dubious tax policy. “Opportunity Zones” is Oregon tax law, even though Oregon lawmakers never voted for it. “Opportunity Zones” arrived via the 2017 federal tax overhaul. This 400-plus tax bill sailed through Congress without a single hearing. Oregon got stuck replicating many tax breaks in the federal law, including “Opportunity Zones,” because the state automatically connects to parts of the federal tax code.

Here is who won and lost from the premature death of HB 4010.

Winner: the ultra-rich

“Opportunity Zones” are tax cuts for capital gains income — the profits from selling stocks, real estate, and other such assets. To benefit, investors shift previously earned capital gains into “Opportunity Funds” that then invest in places designated as “Opportunity Zones.” This allows investors to shrink their tax bill on capital gains income.

Capital gains is the income of the ultra-rich. The top one-tenth of 1 percent of Oregonians — the richest one out of every 1,000 Oregonians — together collect nearly the same amount of capital gains income as the bottom 99 percent of Oregonians. If “Opportunity Zones” appear made for the ultra-rich, it is because they are. They are the brainchild of Facebook billionaire Sean Parker, who used his deep pockets to lobby Congress for this tax subsidy.

Winner: lucky landowners and real estate developers

While “Opportunity Zones” are supposed to help revitalize distressed areas, the big money likely will go to areas already booming, offering the potential of large profits. In Bend, “Opportunity Zones” envelop some of the city’s “most valuable real estate, stretching from the Deschutes River eastward to 27th Street, and from Reed Market Road north past Butler Market Road – essentially, the busiest corridors in the region,” a local commercial real estate firm explains. For owners of property within those boundaries and real estate developers, “Opportunity Zones” are a windfall.

Loser: the vast majority of Oregonians

The vast majority of Oregonians will never profit from “Opportunity Zones,” as they will never put a penny into an “Opportunity Fund.” Worse, “Opportunity Zones” will siphon off Oregon taxpayer dollars — revenue that otherwise support schools and other essential public services. How much revenue Oregon will lose to “Opportunity Zones” is hard to predict. The loss may be modest or massive. Either way, the vast majority of Oregonians lose from this tax subsidy for wealthy investors.

Loser: communities at risk of displacement

Not only is there no requirement that the investments benefit low-income residents, “Opportunity Zones” threaten to accelerate gentrification. That’s the process where wealthier residents move into a previously low-income neighborhood, pushing up rents and, eventually, pushing out long-term residents — often people of color.

The final chapter on “Opportunity Zones” has yet to be written. While HB 4010 died prematurely, the problems with the tax subsidy are too obvious to ignore. The day of reckoning for “Opportunity Zones” may yet arrive in 2021.