Last December’s tax reform bill made many changes to the tax code. While the reduction in tax rates drew the most immediate attention, the law also added a number of new programs to promote economic development. One of these programs, known as “opportunity zones,” is just now starting to be implemented. Congressman Rodney Davis (R-13) was in Decatur this morning to help explain how these zones will drive economic growth.
How do they work?
The opportunity zones are for new investments. New partnerships and corporations created in these zones are eligible for “O-Funds,” if at least 90 percent of the assets are located inside the zone. Companies that already operate inside the zone can benefit as well if they are “substantially improved” by the fund. These benefits are only available to those investing in the zone; shares purchased on the secondary market are not eligible.
Investors stand to save a considerable amount in taxes by investing in an opportunity zone. When investors have realized capital gains, the taxes on those gains are deferred if they are reinvested in the O-Fund. And the longer the funds are invested, the greater the benefit. At five years, the investment received a “stepped-up basis,” for tax purposes of ten percent. After seven years, that basis is bumped another five percent.
What does that mean in practice? A stepped-up basis actually increases the initial value of an asset for the owner. Because capital gains taxes are based on the difference between what an asset is worth when you acquired it and when you sold it, having a higher starting point lowers the amount of taxes you actually have to pay.
But the real benefits kick in at ten years. If an investor holds the shares for ten years, not only do they get the deferment options and stepped-up basis, the federal government will not tax any gains reapplied from the investment in the O-Fund.
The local benefits
One question surrounding the program is how these new zones improve upon TIF Districts and Enterprise zones. These zones offer relief from federal taxes, not state or local. So unlike with TIF or Enterprise zones, local taxing bodies will not lose their property taxes from these zones. By combining the draw of lower taxes with the benefit of keeping other tax dollars local, the hope is the zones will provide even greater local support than the previous economic incentive programs.
Who gets a zone?
Opportunity zones are designed to encourage investment in low-income areas and communities. 327 zones were designated in Illinois, many of them in Central Illinois. Sangamon County received five zones, and Decatur received five as well. In total, 23 of the new zones are located inside the 13th Congressional District.
Click the link to learn more about these zones and find areas near your community.
Illinois launches veteran-owned small business logo program
Finding veteran-owned local businesses will soon be easier.
The Illinois Department of Veterans’ Affairs is offering a sticker to qualifying veteran-owned businesses. Veteran-owned businesses that are registered with the state, and in good standing, can display the logo in their place of business.
The stickers will be released as part of their annual program that sets aside $300 million in state contracts that only veteran-owned businesses can bid on, Illinois Department of Veterans’ Affairs spokesman Dave MacDonna said.
“We want to raise public awareness about small businesses that are veteran-owned or large businesses that are veteran-owned,” he said.
MacDonna said that there are many small business owners across the state and this is a way for consumers to have confidence that they’re spending their money with one.
“We want the consumer to realize that they are a trusted and valuable part of the community,” he said.
The program will run in concurrence to the state’s annual Veterans’ Business program, which gives qualified veteran-owned businesses in the state access to more than $300 million in contracts.
For information about the program, visit www2.illinois.gov/cms/business.
Article by Cole Lauterbach with Illinois News Network. For more INN News visit ILnews.org
America’s newspapers are vanishing, with Illinois losing more than most
When a newspaper closes or stops providing local content, it’s bad news for the local community, according to an updated report.
Since 2004, hundreds of local newspapers have closed up shop. The author of a report on this trend said areas without a local paper suffer in a variety of ways.
A study by the Center for Innovation and Sustainability in Media at the University of North Carolina says newspapers have shuttered at a high rate since 2004, many of which happened shortly after the recession in 2008.
“In total, the United States has lost almost 1,800 papers since 2004, including more than 60 dailies and 1,700 weeklies,” the report found. “Roughly half of the remaining 7,112 papers in the country – 1,283 dailies and 5,829 weeklies – are located in small and rural communities. The vast majority – around 5,500 – have circulations under 15,000.”
Illinois lost 157 weekly papers since 2004, most located in suburban Chicago as many merged with larger daily publications like the Chicago Tribune. This is among the highest number of closings in the country.
“Illinois has lost a tremendous number of newspapers,” said professor Penelope Muse-Abernathy, Knight Chair in Journalism and Digital Media Economics at the University of North Carolina and author of the study. “Newspapers have been the prime, if not sole, source of grassroots coverage of events that affect the quality of life for people in a community.”
The study was updated recently from an initial publication in 2016.
Behind a lack of revenue to support the local publications are decades of declining readership. According to the Pew Research Center, U.S. daily newspaper readership fell by 11 percent in 2017.
Muse-Abernathy said local newspapers have three main benefits to the area they serve: Coverage and oversight of local government; encouragement of regional economic growth and development; and social cohesion.
Often, smaller newspapers will merge with a larger one nearby and then reduce coverage of the area to cut costs, something the report dubs “ghost papers.” Ghost papers offer little to no local content.
“What you have is a paper that was a standalone newspaper in 2004 that has been gradually merged with a parent, usually a large metro daily,” she said. “They first become zoned editions and then tend to morph into an online-only presence with greatly-diminished resources.”
Studies have shown cities without local investigative journalists are more likely to raise taxes and become more inefficient.
The “news deserts” can be found in urban, rural and suburban areas across the nation, but most have one common trait: Poverty.
The report found that locations that had no local newspaper presence had a poverty rate of 18 percent, higher than the 13 percent average nationwide. Residents were also typically older and less educated.
The reason, according to Stanford University economist James Hamilton, is that residents of low-income areas tend to be overlooked by advertisers because they’re less likely to buy subscriptions and have less access to digital media offerings.
Article by Cole Lauterbach with Illinois News Network. For more INN News visit ILnews.org
Illinois Secretary of State warns about marijuana investment scams
Pot is a growing business in Illinois and other states.
And that means marijuana investment scams are becoming a growing problem.
Illinois Secretary of State Jesse White issued a warning about investment scams last week. Canada became the second country to legalize recreational marijuana use. Sales there started last week. In the U.S., nine states and Washington D.C. allow for recreational use of marijuana while many other states allow for medical use. The drug remains illegal under federal law.
“Whenever something is in the news, people who are on the wrong side of the ledger, want to line their pockets,” White said. “They come up with the various schemes to take your hard earned money. And we want to do all that we can to keep these people out of your pocket, so to speak.”
White said people need to do their research before investing in anything, especially the new marketplace of marijuana.
“The company must be registered with the state of Illinois,” White said. “If you have any questions about it, you can go to the website AvoidTheScam.net.”
White said the North American Securities Administrators Association has information on scammers and other flagged-businesses.
If you have been scammed, White said the securities department inside the Secretary of State’s office needs to know.
Article by Benjamin Yount, Illinois News Network. For more INN News visit ILnews.org
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