Turbo Enterprise Zone Act

Summary: Turbo Enterprise Zone Act - Provides for the waiver of Federal income, employment, self-employment, and excise taxes and State, county, and local jurisdiction taxes on qualified residents and qualified businesses in turbo enterprise zones during a five-year period.   Describes such zones as any area designated as being:  (1) afflicted with especially high unemployment; (2) subject to severe economic blight as measured by per capita income and the number of persons below the Federal poverty level; and (3) nonproductive of material tax revenues to the city, county, State, or Federal governments.  Requires designations to be approved by the Secretary of Housing and Urban Development.  Provides for an extension of such period if necessary. 
Suspends the treatment of any deduction, credit, or capital loss carryover during such period. 
Allows a turbo enterprise zone employment credit equal to the applicable percentage of qualified first-year wages to a qualified productive business that:  (1) is engaged in the manufacture or production of any tangible personal property in a turbo enterprise zone for use outside such a zone; or (2) is providing services performed outside such a zone by qualified residents.  Limits such credit to $1,000 for the first-year wages paid to an employee.  Makes such credit applicable to qualified residents of a turbo enterprise zone who are hired during the five-year period.  Make such credit a part of the general business credit.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Turbo Enterprise Zone Act''.

SEC. 2. FINDINGS AND PURPOSE.

    (a) Findings.--Congress finds that:
            (1) It is the Federal Government's responsibility to create 
        the conditions in which enterprise can once again flourish in 
        our inner cities, and to help create jobs where now there is 
        only unemployment.
            (2) Enterprise zones will reduce taxes, regulations, and 
        other government burdens on economic activity in the Nation's 
        most economically depressed areas. If properly implemented, 
        this concept can and will work over a period of several years. 
        Because the problem in our inner cities is more urgent and more 
        immediate, however, it requires a more aggressive reform, 
        designated the ``turbo enterprise zone''.
            (3) To suit the current emergency, the enterprise zone 
        concept is supercharged: first, it is targeted on especially 
        hard-hit areas bereft of current tax revenue production; and, 
        second, the incentives are extraordinary. Specifically, local 
        governments will be asked to ``green line'' the most depressed 
        areas. Within the green line, city, county, State, and Federal 
        governments will cooperate to implement a zero tax rate regime 
        for 5 years: No sales taxes, payroll withholding taxes, 
        property taxes, excise taxes, or income taxes. To obtain these 
        benefits, 90 percent of a business's employees and managers 
        must live within the green line.
            (4) Under current circumstances, the hardest-hit areas of 
        our Nation's inner cities are tax burdens rather than tax 
        producers. By offering striking incentives for capital to 
        locate within the turbo enterprise zone, however, it is 
        realistically to be anticipated that enormous economic activity 
        will occur in this area within the 5-year period. As a 
        consequence, at the end of that time, it is anticipated that a 
        sturdy tax-generating infrastructure will be firmly in place.
    (b) Purpose.--The purpose of this Act is to inspire renewed 
confidence in the blighted areas within America's inner cities, without 
requiring enormous amounts of new taxes and borrowing.

SEC. 3. NO FEDERAL TAXES IN TURBO ENTERPRISE ZONES FOR 5 YEARS.

    (a) Income, Employment, and Self-Employment Taxes.--No tax shall be 
imposed under subtitle A or C of the Internal Revenue Code of 1986 with 
respect to--
            (1) any income received or accrued by--
                    (A) any individual who is a qualified resident of a 
                turbo enterprise zone, or
                    (B) any qualified business, or
            (2) any remuneration paid by a qualified business for 
        services performed by a qualified resident.
This subsection shall not apply for purposes of determining benefits 
under the Social Security Act.
    (b) Excise Taxes.--No tax shall be imposed under subtitle D or E of 
such Code with respect to any taxable event transacted in a turbo 
enterprise zone by a qualified business or by a qualified resident for 
his own account.
    (c) Turbo Enterprise Zone.--For purposes of this section--
            (1) In general.--The term ``turbo enterprise zone'' means 
        any area in the United States if--
                    (A) such area is specifically designated for 
                purposes of this section by the State and each local 
                government having jurisdiction over such area as 
                being--
                            (i) afflicted with especially high 
                        unemployment, to the extent such information is 
                        available;
                            (ii) subject to severe economic blight as 
                        measured by per capita income and number of 
                        persons below the Federal poverty level; and
                            (iii) nonproductive of material tax 
                        revenues to the city, county, State, or Federal 
                        governments; and
                    (B) the designation of such area is approved by the 
                Secretary of Housing and Urban Development.
            (2) Approval of designation.--The Secretary of Housing and 
        Urban Development shall approve any designation under paragraph 
        (1) if such Secretary determines that--
                    (A) the area meets the criteria specified in 
                paragraph (1)(A), and
                    (B) there is in effect (subject to and effective 
                upon the condition of approval by the Secretary as 
                provided in this section) by the State and each of 
                local government having jurisdiction over such area an 
                irrevocable 5-year waiver of all tax levies of any kind 
                (including but not limited to property taxes, sales 
                taxes, payroll withholding taxes, income taxes, excise 
                taxes, and license fees) that would otherwise be 
                applicable to or collectible by qualified residents and 
                qualified businesses.
    (d) Qualified Resident.--For purposes of this section, the term 
``qualified resident'' means any individual whose domicile and 
principal residence is, and has been for at least 6 continuous months, 
located within a turbo enterprise zone.
    (e) Qualified Business.--For purposes of this section, the term 
``qualified business'' means any firm which meets the following 
criteria:
            (1) the principal place of business of such firm is within 
        a turbo enterprise zone;
            (2) 90 percent of the remuneration paid by such firm to 
        employees, consultants, contract labor, or other individual 
        providers is to qualified residents; and
            (3) 90 percent of the number of employees of such firm are 
        qualified residents.
    (f) Application of Section.--
            (1) In general.--This section shall irrevocably apply to 
        any turbo enterprise zone during the 5-year period beginning on 
        the date the Secretary of Housing and Urban Development 
        approves the designation of such zone under subsection (c)(2).
            (2) Extension of 5-year period.--
                    (A) In general.--If, as of the close of the 5-year 
                period referred in paragraph (1) with respect to any 
                turbo enterprise zone, the Secretary of Housing and 
                Urban Development determines that--
                            (i) during such period the average 
                        percentage increase in per capita income for 
                        such zone is at least twice the average 
                        percentage increase in per capita income for 
                        the surrounding area, and
                            (ii) the governmental units referred to in 
                        subsection (c)(2)(B) have extended the waiver 
                        referred to in such subsection for at least an 
                        additional 2 years,
                then this section shall remain in effect for an 
                additional 2 years with respect to such zone.
                    (B) Additional extensions permitted.--If, as of the 
                close of any extension of the 5-year period referred to 
                in paragraph (1) with respect to any turbo enterprise 
                zone, the Secretary of Housing and Urban Development 
                determines that--
                            (i) during the preceding 2-year extension 
                        the average percentage increase in per capita 
                        income for such zone is at least twice the 
                        average percentage increase in per capita 
                        income for the surrounding area, and
                            (ii) the governmental units referred to in 
                        subsection (c)(2)(B) have extended the waiver 
                        referred to in such subsection for at least an 
                        additional 2 years,
                then this section shall remain in effect for an 
                additional 2 years with respect to such zone.
                    (C) Extensions limited to 6 years.--Extensions 
                under this paragraph shall not exceed 6 years.
    (g) Participation by State and Local Governments.--It is the sense 
of the Congress that each State and local government having 
jurisdiction over areas significantly and adversely affected by 
unemployment, gang violence, riots, and looting should take immediate 
steps to eliminate all taxes on qualified residents and qualified 
businesses for the 5-year period described in subsection (f).
    (h) Treatment of Carryovers During Period Taxes Suspended.--For 
purposes of determining the application of any deduction, credit, or 
capital loss carryover under the Internal Revenue Code of 1986, the 
taxable income of the taxpayer on whom no tax is imposed by reason of 
this section for any period shall be treated as zero for such period.

SEC. 4. HIRING INCENTIVES FOR BUSINESSES LOCATED IN TURBO ENTERPRISE 
              ZONE THAT ARE MANUFACTURING PRODUCTS OR PROVIDING 
              SERVICES OUTSIDE SUCH A ZONE.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 is amended by adding at the end 
thereof the following new section:

``SEC. 45. TURBO ENTERPRISE ZONE EMPLOYMENT CREDIT.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
qualified productive business, the turbo enterprise zone employment 
credit for any taxable year is an amount equal to the applicable 
percentage of the qualified first-year wages for the taxable year.
    ``(b) Limitation.--The credit allowed under subsection (a) with 
respect to the qualified first-year wages paid to an employee shall not 
exceed $1,000.
    ``(c) Definitions.--For purposes of this section--
            ``(1) Qualified productive business.--The term `qualified 
        productive business' means any qualified business that--
                    ``(A) is engaged in the manufacture or production 
                of any tangible personal property in a turbo enterprise 
                zone for use outside such a zone, or
                    ``(B) is providing services performed outside such 
                a zone by qualified residents.
            ``(2) Applicable percentage.--The term `applicable 
        percentage' means, with respect to any taxable year, the 
        percentage of the gross receipts of the taxpayer for such year 
        which is attributable to--
                    ``(A) property manufactured or produced by the 
                taxpayer in a turbo enterprise zone and sold for use 
                outside such a zone, or
                    ``(B) services performed outside such a zone by 
                qualified residents.
            ``(3) Qualified first-year wages.--The term `qualified 
        first-year wages' means wages (as defined in section 51(d)) 
        paid by the taxpayer to a qualified resident that are 
        attributable to service by such resident during the 1-year 
        period beginning on the day such resident begins work for the 
        employer.
            ``(4) Qualified business; qualified resident.--The terms 
        `qualified business' and `qualified resident' have the 
        respective meanings given such terms by section 3 of the Turbo 
        Enterprise Zone Act.
            ``(5) Turbo enterprise zone.--The term `turbo enterprise 
        zone' has the meaning given such term by section 3 of the Turbo 
        Enterprise Zone Act.
    ``(d) Application of Section.--This section shall apply to 
qualified residents of a turbo enterprise zone that are hired during 
the period that no tax is imposed on the employer by reason of section 
3 of the Turbo Enterprise Zone Act.''
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of such Code is amended by striking ``plus'' at the end 
of paragraph (6), by striking the period at the end of paragraph (7) 
and inserting ``, plus'', and by adding at the end thereof the 
following new paragraph:
            ``(8) in the case of a qualified productive business (as 
        defined in section 45), the turbo enterprise zone employment 
        credit under section 45(a).''
    (c) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end thereof the following new item:

                              ``Sec. 45. Turbo enterprise zone 
                                        employment credit.''
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after the date of the enactment of 
this Act.