Commentary: Scott: Here’s how to ignite job creation and aid towns like Lancaster

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Editor’s note: Sen. Scott testified Thursday before the congressional Joint Economic Committee on the benefits that Opportunity Zones, passed in last year’s federal tax reform bill, will have on distressed communities across the country. In March, Gov. Henry McMaster selected nearly all of the city of Lancaster as two of the state’s 135 Opportunity Zones. The program makes those areas eligible for tax incentives to encourage business creation. Here are excerpts of Scott’s testimony:

In large part because of the Tax Cuts and Jobs Act, our economy is booming. We’re in the middle of the third-largest economic expansion since 1854. Yes, 1854. And by the time we’re done, it will be the second-largest expansion.
Record revenues entered our Treasury in April. Our unemployment rate is at 3.9 percent. A million folks have come back to the work force. Wages are up 2.9 percent over last year. African-American unemployment is at the lowest record in four decades, since they started keeping track in 1972. Eight hundred thousand new jobs have been created since the passage of this legislation.
Because of tax reform, millions of Americans have seen increases in benefits, wages or bonuses. Seventy-two percent of manufacturers plan to increase wages or benefits this year. Seventy-seven percent plan to hire more employees. Additionally, the National Federation of Independent Business says that optimism for small businesses is at a 45-year high.
Many components of the tax-reform bill have yet to be implemented. And this is really good news, because as I speak the Treasury Department is finalizing guidance for Opportunity Zones.
And here’s why that’s so important. Fifty-two million Americans live in distressed communities. I personally was raised in one of those communities, and I will tell you that the potential in those Opportunity Zones is incredibly high. But too often, too few of those opportunities find themselves manifesting in these distressed communities.
The question that I think the Investing in Opportunity Act answers is how do we attract private-sector capital back into distressed communities. The answer, in part, is to defer the capital-gains tax if you will make a long-term investment in those distressed communities.
This is incredibly important, because the goal is not to make short-term investments. The goal of the legislation is to make sure that those residents living in the Opportunity Zones, those businesses located in the Opportunity Zones and the property that could be rehabilitated in the Opportunity Zones benefit from a long-term view of making a community better without gentrification. And there are a number of examples, from Atlanta to Spartanburg and North Charleston, where we can see that approach become realty.
It’s also a win-win-win. Local mayors had major input in making sure that the governor’s recommendation came from the experts closest to the people. And those of us serving in Congress know that it’s amazing that our approval ratings are at 13 percent – and that includes our family, our cousins, our brothers, our best friends from high school. But local officials have a much higher approval rating. The closer the government is to the people, the more people trust that government.
And when it comes to investing in opportunity and Opportunity Zones, having the mayors’ input with the governor’s assistance makes this a win-win on the local level and the state level. But what makes it a win on the federal level is that our hands are not there, that the red tape and the challenges that come with federal government oversight are not there.
We can have great confidence in our cities and our states to do the right thing for all our citizens.
And by having a program that simply encourages and incentivizes capital to take a second look at communities that they would normally not take a second look at, this is really good news for residents.
My hope is a simple one – that as we see the manifestation and the creation around the country of Opportunity Zones, we’ll be having another joint meeting in a year, in two years, so that we can measure the progress made in a reasonable time. And that we can celebrate in a bipartisan fashion the Opportunity Zone legislation.
While it was part of the Republican Tax Cut and Jobs Act, it is not a partisan legislation. It is not even a bipartisan legislation. It is American legislation for American people stuck – sometimes trapped – in a place where it seems that the lights grow dimmer, and the future does too.
Let’s turn those lights on and make the future bright.

Republican Tim Scott represents South Carolina in the U.S. Senate.