The Trump administration released regulations Wednesday that could help venture capitalists and entrepreneurs benefit from a new tax incentive meant to encourage investment in underserved areas—such as downtown and north Baton Rouge.
The New York Times reports that backers of the incentive, known as Opportunity Zones, had complained to the administration in recent weeks that its regulations could end up steering most of that money into real estate development, rather than start-up businesses that are more likely to create well-paying jobs.
Under the 169-page proposed regulation, the second in a series of rules meant to clarify the 2017 tax law that created the zones, investors can take advantage of the tax breaks in several ways. The new methods are particularly important for investors who hope to fund new coffee shops, grocery stores or possibly, as administration officials conceded, marijuana dispensaries in states that have legalized the drug.
Treasury officials have developed a series of tests, in the regulations they began releasing in October, for which investments should qualify for the tax breaks. One key test many local officials use to evaluate the zones is whether the tax breaks encourage job-creating businesses, not just condos, retail stores, hotels and other real estate projects that often don’t create many permanent jobs with opportunities for advancement.