Ohioans are already seeing many of the positive results of the tax cut and tax reform legislation that became law before the first of the year — in their paychecks, in their businesses, and in their communities.
One provision of the new tax law you may not have heard of, “Opportunity Zones,” has the potential to boost investments and jobs in struggling communities throughout Ohio. Over time, the Opportunity Zones will help transform cities and towns in need to complement the stronger family budget and increased hiring we have already begun seeing from the more immediate changes to our tax code.
For families, one immediate benefit has been the middle-class tax cuts. Doubling the standard deduction, doubling the child tax credit, and lowering tax rates across the board has more hard-earned money staying in Ohioans’ pockets. In fact, the changes to our tax code mean that an Ohio family of four at the median income is saving about $2,000 a year on their taxes.
The relief the new tax code provides to those at the lower-end of the income ladder means that more than three million Americans who paid income taxes before now have no federal income tax liability at all.
On the business side, the new tax law lowered rates and increased investments, making America’s businesses more competitive with other countries. Ohio businesses and workers are benefiting from these changes, and I’ve seen it myself firsthand.
I’ve visited 22 Ohio companies since the first of the year that have either raised wages, hired new employees, delivered bonuses, expanded retirement benefits, or bought new equipment — and oftentimes a combination of these things — as a direct result of tax reform. I’ve also held a dozen roundtable discussions with small businesses — and all tell me the new law helps them succeed.
The new tax law also updated our international tax code to encourage bigger companies to bring overseas profits back to America and invest them in Ohio plants and American workers. In the first three months after tax reform was signed into law, more than $300 billion in profits previously held in other countries were brought back to America to be used and invested here. That’s up from just $38 billion during the same period last year.
The new Opportunity Zones will compliment these positive changes with an emphasis on communities around Ohio continuing to struggle with high levels of poverty.
It starts with states identifying those urban and rural communities that are most in need. Ohio designated 320 low-income census tracts across the state as Opportunity Zones under the new tax law. This allows investors and companies to defer paying capital gains taxes on investments in exchange for committing to invest that additional money into Opportunity Zones long-term, for 10 years or more.
Money invested through this program can be used to start new businesses or invest in existing ones. This incentive will spur investment in areas that truly need it, creating new industry, infrastructure, and jobs for cities and town across Ohio that have been left behind.
Tax reform is already creating a stronger economy with more jobs, higher wages, and a better future for many Ohio families. As this Opportunity Zones program begins to work, it will help the resurgence of struggling communities — and allow even more Ohioans live up to their God-given potential.
Rob Portman represents the State of Ohio in the United States Senate.