States try the tax-break concept in hard-hit urban areas; Congress may create its own zones. ENTERPRISE ZONES
AL CALLOWAY has opened his new store, "Mailboxes," because he sensed opportunity for the private mail service. Now that he has customers walking through the doors, Mr. Calloway is hoping to boost his business further by joining the Newark Enterprise Zone. He has applied to join the 537 other businesses in this city who can legally charge customers a 3 percent state sales tax instead of the normal 6 percent.
"It's another selling point," Calloway says.
Eager to have something to sell to voters, Congress and the White House are also getting on the enterprise-zone bandwagon.
With the memory of the Los Angeles riots still fresh, Congress, with the support of President Bush, has included a provision for federal enterprise zones in the $31 billion tax bill now on the floor of the Senate. A version of the tax act passed the House on July 2. Since Congress is now adjourned, the Senate debate over the bill won't be completed until after Labor Day.
In the Senate version, Congress would set up 125 zones that would give businesses tax breaks for wages paid to workers who live in the zones, as well as tax credits for retraining workers and rehabilitating buildings.
The House version sets up only 50 zones but, at the urging of Housing and Urban Development Secretary Jack Kemp, provides some capital-gains tax relief for small business. HUD will make the final determination on which cities are designated zones.
If the tax bill passes - which is far from certain - the federal government will be following 30 states plus the District of Columbia that currently have operative enterprise zones.
According to HUD, 22 states report 258,395 people working in the zones. As of June 1991, 18 states reported capital investment of $28 billion.