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World’s 19th largest economy – San Francisco Bay – now qualifies for Opportunity Zone status, because its median income is “only” $117,000

It’s tax season for the peons, but while you are wondering where your money is going, a few developers and bankers are chuckling.

San Francisco Bay has been designated an official Opportunity Zone – containing areas where you can invest, make a fortune and pay no taxes – income or otherwise. The IRS describes the deal this way:

Opportunity Zones are designed to spur economic development by providing tax benefits to investors.

First, investors can defer tax on any prior gains invested in a Qualified Opportunity Fund (QOF) until the earlier of the date on which the investment in a QOF is sold or exchanged, or December 31, 2026.

… if the investor holds the investment in the Opportunity Fund for at least ten years, the investor is eligible for an increase in basis of the QOF investment equal to its fair market value on the date that the QOF investment is sold or exchanged.

In short, if you hold your investments and profits (could be billions!) for ten years or more, you pay no capital gains or any other tax during the ten years or when you sell.

Sea Cliff house, San Francisco

The goal of establishing Opportunity Zones is to get capital to struggling low-income census tracts.

So, how did the San Francisco Bay area qualify, considering its annual GDP is $748 billion, just behind the Netherlands’ $822 billion?

The answer – the Bay Area has many residents living below the poverty level of $118,000 for a family of four.

That’s correct. Not $11,800, but really, actually, $118,000.

The state decided that $100,000 average income would be the cutoff, resulting in these areas designated for the free tax ride:

The Bay has a median household income twice that of an average American, so the cutoff for creating a zone is twice as high. The richer the neighborhood, the more likely it will qualify.

Willard st., Philadelphia

Of course, this is nuts, so I decided to check out where I grew up (1918 E. Willard st., Philadelphia) and see if it made the cut.

No luck. The white house on right – the four-room row we rented – didn’t make it.

What’s behind this obvious ripoff of the taxpayers?

One answer is that Nancy Pelosi is the member of Congress representing San Francisco, and some of the world’s richest companies are headquartered in the Bay area.

These ultra-wealthy firms should be bottom-line happy, now that the government will boost their local economies, insulating rich shareholders from any extra expense.

This Bay Opportunity Zone area already has more investors than liver pills, and boasts the world’s richest firms. The following is a list of just the tech firms:

Categories: Government Reform, Taxes

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