ENTERPRISE ZONES

ENTERPRISE ZONES were economically depressed districts targeted for revitalization through tax breaks and regulatory exemptions. Originating in Great Britain in the late 1970s, the concept quickly migrated across the Atlantic and was incorporated into a series of bills introduced in the U.S. Congress during the 1980s. The bills proposed to reduce corporate income taxes and eliminate capital gains taxes for businesses that located in the designated zones. Moreover, federal agencies would be authorized to suspend certain regulations and thereby attract private investment to distressed districts.

With its reliance on incentives to private enterprise rather than government grant programs, the enterprise zone concept won the backing of the Ronald Reagan administration and became the chief element of its urban policy. The Reagan administration failed to secure passage of effective enterprise zone legislation, but by 1990, thirty-seven states had enacted enterprise zone measures that established active programs in at least 400 to 500 districts. Although not magic remedies for economic decline, the state programs achieved some successes. Finally, in 1993 Congress enacted a Clinton administration proposal that provided tax incentives for investment in distressed "empowerment" zones but deviated from the pure enterprise zone concept by also targeting federal technical assistance and grants to the designated areas.

BIBLIOGRAPHY

Green, Roy E., ed. Enterprise Zones: New Directions in Economic Development. Newbury Park, Calif.: Sage, 1991.

Jon C.Teaford

See alsoEconomics .

enterprise zone designated geographical district in which resident businesses are legally entitled to receive special benefits from a government, established in economically depressed areas to encourage companies to locate there. Most states enacted enterprise zone programs during the 1980s, and changes in the federal tax code in 1993 instituted tax incentives for businesses in certain locations, sometimes referred to as empowerment zones. Typical incentives offered to attract businesses to enterprise zones include tax credits, subsidized loans, and reduced regulations. Although usually associated with urban areas, enterprise zones have also been set up in rural areas. Most enterprise zones have only been marginally successful in reviving the areas in which they are located, in part because businesses located in such zones often employ workers who live outside the area.