Mississippi

Did Trump’s tax break save a Mississippi sawmill?

Among the guests President Donald Trump invited to the State of the Union on Tuesday was Roy James, plant manager of a sawmill in Vicksburg, Mississippi, whose appearance was intended to highlight a tax provision the White House credits with saving James’ job.

But whether the tax incentive actually saved the sawmill is unclear. Publicly available evidence does not substantiate the claim, and White House officials did not provide information Tuesday that would substantiate it. While the White House highlighted James in a news release before the speech, Trump never mentioned him — or the provision that the White House claims saved his job.

James’ invitation was intended to call attention to a once-obscure portion of the $1.5 trillion tax overhaul, known as opportunity zones, meant to drive investment to parts of the United States that continue to struggle economically. The 2017 law offered potentially lucrative reductions in capital gains tax bills for investors who put money into projects inside certain areas that state officials designate as opportunity zones.

James worked for 26 years at what used to be called the Anderson-Tully hardwood sawmill. Vicksburg Forest Products bought the mill last year and laid off all 158 workers. It then began refitting the mill to accommodate a different type of lumber and eventually rehired some workers. The plant now employs 125 people.

It is possible that the mill could have been closed by its previous owners if it had not been sold, costing all 158 workers their jobs, rather than a smaller number. But Anderson-Tully officials had not previously indicated to the state that they planned to close the plant, though state records indicate that Anderson-Tully had been seeking for months to sell a tract of land it owned nearby. Local officials were surprised by the news of its sale and pending layoffs, The Vicksburg Post reported in March.

A representative for Vicksburg Forest Products said late Tuesday that the tax provision was a “key reason” it invested in the sawmill.

But at the time the company agreed to buy the mill, there were no guarantees the property would qualify for the new federal incentives.

The planned sale of the mill was announced in March, several days before the state of Mississippi proposed designating the area as an opportunity zone. The Treasury Department did not approve that designation until April.

The new owners have been praised by state and federal officials for their investment — but throughout the sale announcements, in March, May and June, no one appears to have publicly mentioned the Trump tax cut provision. News reports did not begin to cite opportunity zones as a factor in the mill investment until December, when a Trump administration official visited Vicksburg to promote the project.

Vicksburg Forest Products is managed by Billy Van Devender — a wealthy timber baron and philanthropist who donated $2,700 to Trump’s 2016 presidential campaign.

An email to him Tuesday was returned by his son, William Van Devender Jr. He wrote Tuesday evening that “the designation of Vicksburg as an Opportunity Zone was one of the key reasons Vicksburg Forest Products bought, reopened, and invested in the former Anderson-Tully sawmill.”

“Last April, Vicksburg was designated an opportunity zone,” he added. “Our company purchased the mill the following month, knowing about the economic advantages an opportunity zone offered. In June, we announced we were reopening the mill and planned to hire 125 employees.”

Van Devender did not respond to a follow-up question about whether the company had advance knowledge of the state’s pending opportunity zone designation in March, when it first agreed to buy the mill. He also did not directly address the question of how the investment “saved” jobs when the company actually reduced employment at the mill.

The circumstances surrounding the sawmill’s ability to claim the tax incentive highlight critics’ fear that the opportunity zone incentives could end up rewarding economic development that would have occurred anyway — while providing rich investors with tax breaks.

“The best-case scenario is they’ve given a huge capital gains tax break to continue a sawmill,” said Seth Hanlon, a former economic policy adviser to President Barack Obama who is now a senior fellow at the liberal Center for American Progress in Washington, “but with fewer employees.”

A spokesman for Gov. Phil Bryant of Mississippi said in an email: “Gov. Bryant chose these 100 tracts around the State of Mississippi to encourage the exact type of investment that has been seen with the Vicksburg Forest Products sawmill. This is an American success story where more than 100 Mississippians now have jobs thanks to the creation of opportunity zones. We hope this type of investment will continue in other opportunity zone tracts throughout the state.”

The White House, in announcing Trump’s guests, said James had worked at the sawmill for 26 years when he was told that it would close.

“Thankfully, last year, Vicksburg was designated an opportunity zone through provisions in the Tax Cuts and Jobs Act,” the White House wrote. “The plant soon reopened and Roy was hired to oversee the entire facility.”

Ben Carson, the Housing and Urban Development secretary whom Trump has appointed to lead an administration task force on opportunity zones, went further at an appearance in Vicksburg in December.

Carson said the mill was “just an incredible sight here,” The Vicksburg Post reported, “because this is one of the first places to actually take advantage of the opportunity zones and opportunity funds. Had it not been for that program, it would very likely that this place would have closed down and those jobs gone away.”

Trump did not refer to opportunity zones in his speech Tuesday. He only briefly mentioned the tax law, as part of a section boasting about the strength of the economy.

“Companies are coming back to our country in large numbers,” he said, “thanks to our historic reductions in taxes and regulations.”

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