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Show New Look At Enterprise Zone In the Babson's Reports Inc., of July 30, 1981, massive federal programs designed to invigorate the economies of the decaying cores of American Amer-ican cities have fallen far short of that goal. Perhaps that is why strong bipartisan support seems to be building in favor of a new concept that would start small business growth and create cre-ate jobs in urban downtown settings. This would be accomplished accom-plished for the most part through tax breaks. While these would be chiefly at the federal level, special tax treatment treat-ment at state and local levels would be encouraged as well. THE URBAN jobs and enterprise en-terprise zone measure has been filed in the U.S. House of Representatives by noted tax cutter, Rep. Jack Kemp (R-N.Y.) (R-N.Y.) and liberal-leaning Rep. Robert Garcia (D-N.Y.). It is a careful redraft of legislation filed by Kemp in the last Congress. Con-gress. Rationale for the measure mea-sure is a plan which was started two years ago by leaders lead-ers of British Prime Minister Margaret Thatcher's Conser vative Party. The plan is based on the premise that government govern-ment itself is a leading, if not a chief, contributor to city ills. The British experiment offers tax incentives to new small business and to employes em-ployes of these enterprises. It is intended as the conservative answer to socialism and over-regulation over-regulation by government. So, its top priority is the promotion of private intiative for individuals indi-viduals and businesses. SO FAR, 1 1 enterprise zones have been established in Britain, and it is expected that all of them will be in full operation opera-tion before this summer ends. It will, however, be several months before a fair measure of their progress can be made. The Kemp-Garcia bill, with a companion measure introduced intro-duced in the Senate by Sens. Rudy Boschwitz (R-Minn.) and John Chafee (R-R.I.), aims to offer tangible opportunity to the urban poor and to small business endeavors in the inner in-ner city. It is more flexible than the original Kemp bill, has better bet-ter tax incentives, eives more attention to locaf and state government participation. Actually, local governments will designate the enterprise zones even though their choices will be subject to federal fed-eral government approval. WITHIN these zones, Uncle Sam will extend major tax incentives in-centives for job establishment and the creation and expansion of small business. For participating businesses, busines-ses, these federal tax incentives incen-tives would eleminate capital gains tax liability within the approved zones, exempt from taxation half of all income earned by zone enterprises, and also exempt interest income in-come earned on loans to these enterprises. The loss carryforward carryfor-ward would be extended to 20 years to permit zone undertakes under-takes to write off intitial losses against long-term gains as a means of encouraging entrepreneurial entrep-reneurial progress. FINALLY, a 5 percent refundable re-fundable business income tax credit equal to 5 percent of the wages paid CETA-eliRible zone employes would be made available as an offset to the adverse impact of the Social Security payroll tax. Individuals who are poor but able to seek and retain tax-paying tax-paying employment in enterprise enter-prise zones would get a refundable refund-able 5 percent personal income tax credit for pay earned by zone workers up to $1,500. WHILE THE Kemp-Garcia bill is finding favor in both House and Senate, passage this year is not expected. And favorable action in 1982 could come only after an uphill fight. Labor leaders are adamantly opposed even though the measure mea-sure no longer contains earlier provisions for reduced Social Security taxes and a sub-minimum sub-minimum wage for unskilled youth. Granted, the measure has been endorsed by Administration Administra-tion officials and many leading civic and business organizations. organiza-tions. Together, these may ultimately provide enough support to ensure passage if the White House really gets behind the bill. |