1982 Ronald Reagan - Enterprise Zone Tax Act of 1982

 

In 1980, presidential candidate Ronald Reagan endorsed federal enterprise zone programs that would offer tax incentives to selected pockets of distressed communities across the nation.   On the campaign trail, he argued that by relaxing regulations, reducing property taxes, and changing the rules for business, he could bring new investments and jobs to   depressed urban communities.  President Reagan later introduced the Enterprise Zone Tax Act of 1982 and urged Congress to make enterprise zones a reality.  After several years of inaction, Reagan complained that the proposals were being held hostage by the Democratic party, and in the end federal enterprise zones became little more than a broken.

In President Reagan’s1982 State of the Union Address, he introduced his proposal as a cooperation of federal, state, and local governments to use the free enterprise and save America.

"Hand in hand with this program to strengthen the discretion and flexibility of State and local governments, we're proposing legislation for an experimental effort to improve and develop our depressed urban areas in the 1980's and '90's. This legislation will permit States and localities to apply to the Federal Government for designation as urban enterprise zones. A broad range of special economic incentives in the zones will help attract new business, new jobs, new opportunity to America's inner cities and rural towns. Some will say our mission is to save free enterprise. Well, I say we must free enterprise so that together we can save America."

Building on top of earlier proposals introduced by New York Congressmen Jack Kemp and Robert Garcia, the new bill would have created 75 federally recognized Enterprise Zones over the next three years.  In each zone, the tax bill offered the following incentives:

1. Elimination of the capital gains tax on investments.
2. 10% income tax credit up to $1500 for each new worker hired.
3. 5% income tax credit up to $450 for each worker.
4. Industrial bonds to zone businesses.
5. Relaxation of federal non-statutory regulations (as directed by the state and local authorities).

The incentives were very appealing to many states and several of them decided to move forward by designating enterprise zones in anticipation that federal zones would follow suit. By 1983, 19 states had already enterprise zone programs already in place with seven states designating actual zones. Louisiana had designated the most with 473 followed by Florida at 116. Connecticut, Kansas, Maryland, Ohio, and Pennsylvania also designated zones in their states.  In 1985, six more states passed enterprise zone acts, but still Congress had not taken any action on the federal 1982 Enterprise Zone act. In 1984, President Reagan once again appealed to Congress to pass his Enterprise Zones act to help create jobs and restore neighborhoods

"It's not just the home but the workplace and community that sustain our values and shape our future. So, I ask your help in assisting more communities to break the bondage of dependency. Help us to free enterprise by permitting debate and voting "yes" on our proposal for enterprise zones in America. This has been before you for 2 years. Its passage can help high-unemployment areas by creating jobs and restoring neighborhoods."

Unfortunately, Congress again failed to act, and it wasn't until 1988, during Reagan's final year in office that they sent the president a bill that included Enterprise Zones. Title VI of the Housing and Community Development Act of 1987 established federal Enterprise Zones, but without any real substance.  The bill merely promised that the action by the federal government would follow in future bills. Enterprise Zones so long sought by President Trump and promised in 1980, did deliver on many of the promises to bring jobs to depressed urban areas, but without any significant federal legislation during President Reagan's administration. It was a failed campaign promise that President Reagan blamed on the Democratic Party.  In a 1984 radio address to the American people, President Reagan reported that "from day one, our enterprise zone proposal has been held hostage by the House leadership, the very people who act as if they expect black and Hispanic Americans to march in lockstep with the Democratic Party."

References

Presidency.ucsb.edu. 2020. Address Before A Joint Session Of The Congress Reporting On The State Of The Union | The American Presidency Project. [online] Available at: <https://www.presidency.ucsb.edu/documents/address-before-joint-session-the-congress-reporting-the-state-the-union-2> [Accessed 7 October 2020].

Presidency.ucsb.edu. 2020. Address Before A Joint Session Of The Congress On The State Of The Union | The American Presidency Project. [online] Available at: <https://www.presidency.ucsb.edu/documents/address-before-joint-session-the-congress-the-state-the-union-4> [Accessed 7 October 2020].

Presidency.ucsb.edu. 2020. Radio Address To The Nation On The Presidential Campaign | The American Presidency Project. [online] Available at: <https://www.presidency.ucsb.edu/documents/radio-address-the-nation-the-presidential-campaign-0> [Accessed 7 October 2020].

Uindy.historyit.com. 2020. Address By The Honorable Ronald Reagan To The Annual Convention Of The National Urban League. [online] Available at: <https://uindy.historyit.com/item.php?id=795341> [Accessed 7 October 2020].

Wolf, Michael Allan. “An ‘Essay in Re-Plan’: American Enterprise Zones in Practice.” The Urban Lawyer, vol. 21, no. 1, 1989, pp. 29–53. JSTOR, www.jstor.org/stable/27894597. Accessed 7 Oct. 2020.