I
103D CONGRESS
1ST SESSION
H. R. 1051
To amend the Internal Revenue Code of 1986 to provide for the designation
of turbo enterprise zones to assist areas of high unemployment and
severe economic blight.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 23, 1993
Mr. COX introduced the following bill; which was referred to the Committee
on Ways and Means
A BILL
To amend the Internal Revenue Code of 1986 to provide
for the designation of turbo enterprise zones to assist
areas of high unemployment and severe economic blight.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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 responsibil-
ity 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, regula-
tions, 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 enter-
prise zone concept is supercharged: first, it is tar-
geted 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 in-
centives for capital to locate within the turbo enter-
prise zone, however, it is realistically to be antici-
pated 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 stur-
dy 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 resi-
dent of a turbo enterprise zone, or
(B) any qualified business, or
(2) any remuneration paid by a qualified busi-
ness for services performed by a qualified resident.
This subsection shall not apply for purposes of determin-
ing 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 unem-
ployment, 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 pov-
erty level; and
(iii) nonproductive of material tax rev-
enues to the city, county, State, or Federal
governments; and
(B) the designation of such area is ap-
proved by the Secretary of Housing and Urban
Development.
(2) APPROVAL
OF
DESIGNATION.—The Sec-
retary of Housing and Urban Development shall ap-
prove 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 effec-
tive upon the condition of approval by the Sec-
retary as provided in this section) by the State
and each of local government having jurisdic-
tion 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 appli-
cable to or collectible by qualified residents and
qualified businesses.
(d) QUALIFIED RESIDENT.—For purposes of this
section, the term ‘‘qualified resident’’ means any individ-
ual 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 sec-
tion, 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 Hous-
ing and Urban Development approves the designa-
tion 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 Sec-
retary of Housing and Urban Development de-
termines 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
PER-
MITTED.—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 exten-
sion 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 ex-
ceed 6 years.
(g) PARTICIPATION BY STATE AND LOCAL GOVERN-
MENTS.—It is the sense of the Congress that each State
and local government having jurisdiction over areas sig-
nificantly 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 carry-
over under the Internal Revenue Code of 1986, the taxable
income of the taxpayer on whom no tax is imposed by rea-
son 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 MANU-
FACTURING PRODUCTS OR PROVIDING SERV-
ICES OUTSIDE SUCH A ZONE.
(a) IN GENERAL.—Subpart D of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of
1986 is amended by adding at the end thereof the follow-
ing 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 quali-
fied first-year wages for the taxable year.
‘‘(b) LIMITATION.—The credit allowed under sub-
section (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 quali-
fied business that—
‘‘(A) is engaged in the manufacture or pro-
duction of any tangible personal property in a
turbo enterprise zone for use outside such a
zone, or
‘‘(B) is providing services performed out-
side 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 de-
fined 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
RESI-
DENT.—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 busi-
ness (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.
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