[Congressional Record Volume 141, Number 145 (Monday, September 18, 1995)]
[Senate]
[Pages S13737-S13738]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ABRAHAM (for himself, Mr. Lieberman, Mr. Santorum, Ms. 
        Moseley-Braun, and Mr. DeWine):
  S. 1252. A bill to amend the Internal Revenue Code of 1986 to provide 
additional tax incentives to stimulate economic growth in depressed 
areas, and for other purposes; to the Committee on Finance.


                the enhanced enterprise zone act of 1995

 Mr. ABRAHAM. Mr. President, today, I am joined by Senators 
Lieberman, Santorum, DeWine, and Moseley-Braun in introducing the 
Enhanced Enterprise Zone Act of 1995, legislation to stimulate job 
creation and residential growth in America's most distressed rural and 
urban communities.
  In 1980, then-Representative Jack Kemp introduced the first 
enterprise zone legislation in the United States, the Urban Jobs and 
Enterprise Zone Act. Twelve years later, the Omnibus Budget 
Reconciliation Act of 1993 authorized over 100 enterprise and 
empowerment zones to receive a limited combination of tax benefits and 
other Federal assistance to support economic revitalization and 
community development.
  For truly distressed communities, however, there is concern that this 
package of benefits will not be sufficient to spur economic growth and 
job creation. This concern was reaffirmed by the Senate earlier this 
week during consideration of S. 4, the Work Opportunity Act of 1995. On 
Wednesday, September 13, the Senate unanimously adopted an amendment 
calling on Congress to enact enterprise zone legislation that includes 
stronger incentives for investment, job creation, and economic growth.
  At a time when Congress is debating the merits of the Federal welfare 
system and looking at reforms to our social safety net, it is 
imperative that we look for ways to stimulate new opportunities for 
work and growth in our most distressed neighborhoods.
  For that reason, today my colleagues and I are introducing 
legislation to supercharge existing enterprise communities and 
empowerment zones. These enhanced enterprise zones would encourage 
entrepreneurial and residential activity by:
  Establishing a capital gains rate of zero for the sale of any 
qualified investments that are held for at least 5 years;
  Permitting limited income deductions for the purchase of qualified 
stock in businesses located in an enterprise zone;
  Doubling the amount small business owners in these zones are allowed 
to expense;
  Providing a limited tax credit for low-income renovations;
  Loosening regulatory barriers to home ownership and job creation;
  Providing incentives and grants for resident management and home 
ownership of public housing; and
  Creating a pilot school choice program for the existing empowerment 
zones, supplemental empowerment zones, and Washington, DC.
  Mr. President, for economically troubled areas, attracting 
entrepreneurial businesses is the key to beginning the process of 
revitalization. The tax benefits of enhanced enterprise zones are 
targeted at addressing the principal hurdles facing small businesses 
when they are just getting started--raising capital and maintaining 
cash flow.
  First, we eliminate taxation on capital gains. The United States has 
some of the highest capital gains taxes in the world. For distressed 
communities seeking capital investments, these taxes inhibit investment 
and lockout sources of growth. Our bill establishes a capital gains 
rate of zero for the sale of any qualified zone stock, business 
property, or partnership interest that has been held for at least 5 
years.
  Second, we encourage investment in enterprise zones through the 
creation of enterprise zone stock. Ask small business entrepreneurs 
what their biggest hurdle is, and chances are they will reply--raising 
capital. This legislation allows individuals to deduct the purchase of 
qualified enterprise zone stock from their income--up to $100,000 in 
one year and $500,000 in their lifetime.
  Third, we provide small enterprise zone businesses with extra 
expensing. Another obstacle particularly difficult 

[[Page S 13738]]
for small businesses to overcome is maintaining an adequate cash flow. 
Our legislation would double the maximum allowable expensing for 
purchases of plant and equipment in the enterprise zones.
  Fourth, we encourage the renovation of deteriorated buildings located 
in the enterprise zones. This proposal is based upon legislation 
introduced by Senator Kay Bailey Hutchison and it is designed to 
encourage private investment in economically distressed areas by 
providing a targeted, limited tax credit to businesses to help defray 
their cost of construction, expansion, and renovation of buildings 
located within enhanced enterprise zones.
  Another obstacle to growth and jobs in distressed communities is the 
burden of regulation on small businesses. Our bill would create a 
process by which local governments could request a waiver or 
modification of regulations that hinder the job creation, community 
development, or economic revitalization objectives of the enterprise 
zone. The relevant Federal agencies would have the discretion to 
approve or disapprove of any regulatory waiver or modification. 
Furthermore, they would be prohibited from granting regulatory waivers 
that would violate the Fair Labor Standards Act or present a 
significant risk to public health, safety, or the environment.
  To help low-income families become homeowners with a stake in their 
communities, our legislation would establish an Enterprise Zone Home 
Ownership Program. Based upon Jack Kemp's proposals when he was the 
Secretary of Housing and Urban Development, this proposal would provide 
grants for: First, resident management of public housing; and second, 
home ownership of public housing, vacant and foreclosed properties, and 
financially distressed properties.
  Finally, within the nine empowerment zones, two supplemental 
empowerment zones, and Washington, DC, our bill would create a pilot 
school choice project to provide low-income parents and their children 
with financial assistance to enable them to select the public or 
private school of their choice. Under this plan, a designated grantee 
within each empowerment zone will provide parents with educational 
certificates to be used towards the cost of tuition and transportation 
for elementary or secondary schools within the empowerment zones.
  In conclusion, Mr. President, will enhanced enterprise zones work? 
The answer, quite simply, is yes. We know they will work because 35 
States and the District of Columbia already have enterprise zones that 
have produced over 663,000 jobs and $40 billion in capital investment. 
The enterprise zone concept has been endorsed by the National 
Governor's Association, the Conference of Black Mayors, the Council of 
Black State Legislators, and the U.S. Conference of Mayors.
  This bill represents an affirmative effort to create economic 
opportunities for the urban and rural poor by recognizing that private 
enterprise, not government, is the source of economic and social 
development. Taken as a whole, the incentives included in this 
legislation for investment, entrepreneurship, home ownership, and skill 
development will being economies in distressed areas back to life. They 
will encourage full participation in our market economy and public 
interest in local neighborhoods--resulting in economic growth and new 
jobs.
 Mr. LIEBERMAN. Mr. President, I'm delighted to join in the 
introduction of this important legislation, the Enhanced Enterprise 
Zone Act of 1995.
  Last week, this body unanimously approved an amendment calling on 
Congress to enact legislation to supercharge the enterprise communities 
and empowerment zones we created in 1993. While the 1993 legislation 
creating these entities was not perfect and the legislation did not go 
far enough, particularly for the enterprise communities, it represented 
a fundamental change in urban policy. I believe that legislation was a 
clear recognition of the fact that government does not have all the 
answers to the ills of poverty in this country and that American 
business can and must play a role in revitalizing poor neighborhoods.
  The 1993 legislation was a good start but it did not go far enough. 
The bill we are introducing today takes us further down the road of 
attacking the problems that plague our cities and economically 
distressed rural areas.
  I should note that I do have concerns with some of the provisions of 
the regulatory flexibility title of this bill. For example, I think we 
must work on making changes to provide greater assurance that any 
modifications or waivers of rules would not in any way compromise the 
benefits that are achieved through existing environmental protection 
and public health laws and regulations. I hope that these provisions 
can be worked on as this bill progresses through the legislative 
process.
  Given that reservation, I believe this is an important bill that will 
do much to provide an economic boost to the areas of this country that 
most desperately need that help.
  I urge my colleagues to join me in supporting this 
legislation.
                                 ______