Paul L. Caron

Wednesday, June 5, 2019

Layser: A Multi-State Survey Of Enterprise Zone Tax Incentives

Michelle D. Layser (Illinois), How Do Place-Based Investment Tax Incentives Target Low-Income Communities? A Multi-State Survey of Enterprise Zone Tax Incentives:

Place-based investment tax incentives known as enterprise zone laws have historically been used as a method for subsidizing investment in low-income communities. Scholarly and policy treatments of enterprise zone laws commonly discuss them as if there is a unified approach to designing these programs. This report finds, however, that although most (33/50) states have enterprise zone laws, these programs vary significantly in important respects — including zone eligibility requirements; eligible investment types; incentives to invest in human capital or affordable housing; and taxpayer eligibility.

Understanding these variations is particularly important to understanding how past experience with enterprise zones can inform new place-based incentives, such as those that have been introduced in the federal Opportunity Zones program.

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In Chapel Hill, NC, a building on Franklin Street, our main drag comparable to Massachusetts Ave in Lawrence, KS, qualified as being in an Enterprise Zone. This was primarily based on the low income in the same census district as the building. That area’s low income is almost exclusively based on the low income of the students who inhabit it, most of who have come from middle class to upper middle class homes and who will instantly rise to middle class status on graduation. There is likely a comparable situation in Durham with a Zone that abuts the Duke campus and hospital complex. I am sure these are not unique situations. As a matter of fact, such situations were common in the late 60s and early 70s until college students were excluded from the low income category.
Given the hurried way the 2017 bill was put together with virtually no input from Treasury staff and with massive input from lobbyists, such results are hardly surprising.

Posted by: Bill | Jun 5, 2019 4:30:13 PM