How Do the Rich Keep Getting Tax Breaks?
This is one of a series of interviews by Bloomberg Opinion columnists on how to solve the world’s most pressing policy challenges. It has been edited for length and clarity.
Alexis Leondis: You spent 30 years as a reporter, editor and columnist at the Wall Street Journal and now serve as senior fellow and director of the Hutchins Center on Fiscal and Monetary Policy at the Brookings Institution. In your new book, “Only the Rich Can Play: How Washington Works in the New Gilded Age,” you focus on a tax break, passed by Congress in 2017, that lets wealthy Americans defer or cut their capital gains tax bills by investing in what are supposed to be economically disadvantaged areas, or opportunity zones. What made you want to tell the story?
David Wessel, senior fellow, Brookings Institution and author, “Only the Rich Can Play: How Washington Works in the New Gilded Age”: One of my colleagues at Brookings, Adam Looney, is a public finance economist who had been in the Treasury Department during the Obama administration. He’s always looking at tax bills as they come through Congress and pointing out things with more outrage than you usually get from economists. When he mentioned this to me, I thought it was more likely to be like a Brookings policy brief kind of thing. But then he dropped that this began with Sean Parker of Napster and Facebook fame. That’s what got me interested.
Then I heard about this opportunity zone expo in the spring of 2019 at the Mandalay Bay Resort and Casino complex in Las Vegas. I went to the conference and it was what a modern-day gold rush looks like. And there were so many interesting people and they were so willing to talk about what they were doing. That’s what really made me think, “Wow, this is a great story.” And of course, there had been and continue to be some good investigative reporting on this, including from people at Bloomberg, so I knew there might be something interesting there.
AL: Sean Parker, the brainchild behind opportunity zones, was able to get this tax break included in the 2017 tax overhaul. He spent about $10 million in lobbying in just a few years. Is this the new way tax benefits get doled out in Washington or was this a one-off?