While Opportunity Zones (OZs) were created to incentivize development in economically-distressed areas, the program is also going toward benefiting a loftier endeavor: the space race.
Multi-billionaires Jeff Bezos and Elon Musk both have pet projects to offer the private sector option for space shuttle rides. As reported by Bloomberg, their respective space company sites are in OZs, shielding their operations from capital gains taxes. If those locations are still operational after a decade, their appreciation will remain exempt from federal capital gains taxes into perpetuity.
Bezos’s Blue Origin has a rocket engine plant located in an OZ-designated census tract in Alabama, and Musk’s SpaceX has a launch site in an OZ-designated census tract in Texas. Sir Richard Branson is also eligible for space race-related tax benefits — his public Virgin Galactic company has sites in OZs in California and New Mexico. All of these projects were already in-process before the census tracts received OZ designation.
Their space gambits could fizzle, or course. But they could also generate lofty profits for Bezos and Musk, who have already received billions of dollars in federal space contracts between them.
OZs have come under fire this year amid mounting evidence of lax oversight and little benefit to the residents whose incomes made the tract eligible for OZ designation. For SpaceX in particular, residents of nearby Boca Chica have been displaced as Musk bought their houses last year in hopes of developing a resort for space tourists on that land.
“It would be a gross misuse of scarce resources to be subsidizing billionaires to go out into space when there are people struggling with real problems here on earth,” said Brett Theodos, who has studied OZs for the Urban Institute.
As published by Urban Turf – December 9