This bill would aim to facilitate job growth, entrepreneurship, and improved educational opportunities by creating "Economic Freedom Zones" in economically distressed areas. Individuals and businesses investing in those areas would receive tax breaks, and would be exempt from complying with certain regulations.
An area designated as an Economic Freedom Zone would be prohibited from receiving federal assistance (e.g. loans, loan guarantees, or purchases). Economic Freedom Zones would be defined as a state, municipality, zip code, or rural area that is:
A debtor in a bankruptcy;
An insolvent municipality or state that can no longer pay its debts;
Eligible for bankruptcy;
Blighted with poverty and high rates of unemployment (defined as 1.5 times the national average or more).
After an Economic Freedom Zone is designated, this bill would activate tax incentives for individuals and corporations to invest in them by establishing:
5 percent flat tax rate on individual & corporate income in the zone;
0 percent capital gains tax rate on profits from the sale of assets and property in Economic Freedom Zones -- which could be tangible assets like property or intangible like stocks;
Reduced employment tax rates;
Increased allowance for business property expensing.
Economic Freedom Zones would be exempt from having to comply with some environmental regulations, historic preservation requirements, and wage rate requirements under the Davis-Bacon Act.
This bill amends the tax code to allow:
A $5000 tax credit for a student attending elementary or secondary school whose primary residence is in an Economic Freedom Zone.
A tax-exempt educational savings account for individuals living in an Economic Freedom Zone.
A tax credit, rather than a tax deduction, for contributions to a charitable organization serving individuals in an Economic Freedom Zone.
The Elementary and Secondary Education Act of 1965 would be amended to allow special allocation of grant funds to children whose families live in an Economic Freedom Zone and whose incomes are below the federal poverty level.
To widen the pool of investors, the Secretary of Homeland Security (DHS) and Secretary of Labor to issue Special Economic Freedom Zone Visas to aliens meeting educational & skill requirements who seek to enter the U.S. to invest in Economic Freedom Zones.