enterprise zone

noun

Definition of enterprise zone 

: an economically depressed area in which business growth is encouraged by the government through tax relief and financial concessions

Examples of enterprise zone in a Sentence

Recent Examples on the Web

Academic studies have found little effect from state enterprise zones and modest benefits from federal efforts, such as public spending on infrastructure and social services. Ruth Simon, WSJ, "Rich Investors Eye Tax-Favored Development Funds," 14 Nov. 2018 The Gulch is considered as a potential enterprise zone. J. Scott Trubey, ajc, "Texts show Bottoms and Atlanta schools negotiating Gulch incentives," 21 June 2018 However, in 2016 the Hillsboro City Council made changes to its enterprise zone program that ties the tax benefits to job creation. Mike Rogoway, OregonLive.com, "Data center plans huge 92-acre project in Hillsboro," 28 May 2018 An argument is made by some in the legislature that projects such as this would happen without the inducement of an enterprise zone to spark its growth. Richard Greene, star-telegram, "Tax breaks for one development shows why they can be good for a city," 1 June 2018 The factory is in an enterprise zone, meaning at least some of De Beers' investment will be exempt from the local property taxes other businesses pay. Mike Rogoway, OregonLive.com, "Diamonds in Gresham: De Beers will build $94 million synthetic gem factory," 31 May 2018 So all of these prior things that have been tried—like the New Markets Tax Credit or what ultimately became enterprise zones, which was the Jack Kemp concept that President Clinton signed into law—were essentially tax credits. Clifton Leaf, Fortune, "Q&A: Sean Parker on Napster, Spotify, and His Federal Tax Law Triumph," 25 May 2018 Oregon's big draw for data centers is the absence of a state sales tax, which saves companies hundreds of millions of dollars on those servers, and a property tax exemption under Oregon's enterprise zone program that's worth even more. Mike Rogoway, OregonLive.com, "Google touts $1.8 billion data center investment in The Dalles," 23 Apr. 2018 Barbara Bush said her husband had proposed capital gains tax cuts, economic enterprise zones, and the use of individual retirement accounts to help struggling Americans buy homes — to no avail. Felice Belman, BostonGlobe.com, "Forget what you thought about rooftop solar and consider these seven things instead," 18 Apr. 2018

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'enterprise zone.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of enterprise zone

1978, in the meaning defined above

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5 Dec 2018

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The first known use of enterprise zone was in 1978

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enterprise zone

noun

Financial Definition of enterprise zone

What It Is

An enterprise zone is a geographical area (often a few blocks or miles in a town) with a 0% tax on gains from the sale of assets and property sold in an enterprise zone.

How It Works

For example, let's say that downtown ABCTown has decayed over the last 10 years. There are many vacant storefronts, a lot of drug activity, dead landscaping, pitted sidewalks, and abandoned houses.

The state wants people to gentrify the area so that business open, jobs come to the area, people invest in improving the area, and the resulting higher property taxes will fund improvements such as roadwork and new landscaping. This, the state believes, will turn downtown ABCTown around. So, it creates an enterprise zone in which all gains on property sales are taxed at 0%.

John and Jane Doe hear about this and start looking at houses. They form an LLC and buy a house in the enterprise zone for $55,000. They put $15,000 into improving the property. Soon they have a nice house worth $95,000 that they can rent to a college student for $450 a month. They do this for a few years, and over that time more small businesses purchase and fix up homes in the area. This increases the value of the Doe home more—to $100,000. After five years, John and Jane decide to sell the house and travel around the world. Through their business, they sell the house for a $45,000 profit and don't pay capital gains on the sale to the state, saving them, say, $3,000.

Why It Matters

Governments implement enterprise zones when they want to encourage investments in certain areas. The D.C. Enterprise Zone is one example. The idea isn't just to make an ugly neighborhood pretty again; when portions of a city are revitalized, the value of the properties in the area increases, which generates more property tax revenue later for the municipality. Thus, from a government perspective, the idea is to forgo a little tax revenue now in order to gain a lot of tax revenue later.

Source: Investing Answers

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