THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, August 9, 1994 TAG: 9408090013
SECTION: FRONT PAGE: A14 EDITION: FINAL
TYPE: Editorial
LENGTH: Short : 45 lines
Gov. Allen wants to dramatically increase the number of enterprise zones in Virginia as part of an overall strategy of making the state more business friendly. The move has been bogged down in the Senate Finance Committee, which has sent the proposal to a study committee. What should be noted in the ensuing debate is that enterprise zones have some things to recommend them, but in a larger way, they miss the point: Why isn't all of Virginia - indeed, the United States - an enterprise zone?
Virginia's existing enterprise zones, established in 1983, are doing a good job of proving one thing: Taxes matter.
Businesses have moved from one part of cities such as Richmond to other parts that have been designated an enterprise zone in order to take advantage of the tax breaks. Some businesses have set up storefronts in the zones, through which they funnel receipts in order to qualify for tax breaks. The existence of enterprise zones is proof that taxes are too high elsewhere.
What needs to be debated is the reason why many urban neighborhoods are in such desperate straits that they need to be dubbed enterprise zones in the first place. Zoning and business regulations, high taxes to pay for social programs, high crime and the resulting high insurance rates are what help drive businesses out of the neighborhoods.
Poor neighborhoods used to be teeming with small entrepreneurs who were short on capital but long on ambition. Entrepreneurs set up shop right where they lived. Extended families and people from the neighborhood helped run the businesses. As George Mason University economist Walter Williams once said about enterprise zones, ``When I was growing up, I thought America, from sea to shining sea, was an enterprise zone.''
Gov. Allen has the right idea in that he wants to expand the number of enterprise zones in Virginia from the current 25 to about 50. But why stop at just 50? Why not make the entire community an enterprise zone? Lower taxes and regulation, good infrastructure and law enforcement, help draw businesses and keep them in place. by CNB