Enterprise Zones in Indiana: Revitalizing Communities Through Tax Incentives

Enterprise Zones in Indiana, led by Anita Yadavalli, Ph.D., aim to uplift traditional downtown and industrial areas facing decline by offering tax incentives to designated businesses. Majority of the incentives are claimed by manufacturing firms, showcasing their impact on employment and economic development efforts in the region.

• Enterprise Zones
• Indiana
• Tax Incentives
• Economic Development
• Manufacturing

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1. Enterprise Zones in Indiana Anita Yadavalli, Ph.D. Senior Fiscal Analyst Indiana Legislative Services Agency

2. Enterprise Zones EZs are utilized for the revitalization of traditional downtown areas or old industrial and manufacturing areas that have gone through a protracted period of decline. Zone businesses, which are designated on the basis of high unemployment and poverty rates, receive some combination of labor and capital tax incentives. Program Incentives Investment deduction Employment expense credit Loan interest credit Employee income deduction Investment cost credit NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 2

3. EZ Firms by Industry NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 3

4. Which Firms Are Claiming Incentives? Majority are claimed by manufacturing firms, which make up only 9% of all zone businesses. Manufacturing firms also employ 3 times as many workers, suggesting that large manufacturing firms are utilizing the tax incentives. NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 4

5. Effect of Economic Development Efforts on EZ Tax Savings NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 5

6. Impact on All Employment Estimated Effect of Incentive on Employment Marginal Effect of $10,000 increase in Incentive NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 6

7. Enterprise Zone Participation Fees Many local UEAs use their revenues for community development projects. 2013-2014 2014-2015 2015-2016 Urban Enterprise Association Participation Fee % of Total Revenue 63% 20% 83% 60% 98% 98% 100% Participation Fee % of Total Revenue 75% 34% 98% 64% 99% 93% 100% Participation Fee % of Total Revenue 100% 35% 98% 68% 99% 93% 100% Total Revenue Total Revenue Total Revenue Bedford East Chicago Evansville Fort Wayne LaPorte South Bend Vincennes Source: Indiana Urban Enterprise Associations $103,000 512,950 346,834 419,063 179,565 284,898 106,888 $108,000 235,184 326,987 436,556 451,263 62,206 110,093 $85,000 217,718 371,974 459,393 695,899 54,000 112,289 NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 7

8. Thank You ANITA.YADAVALLI@IGA.IN.GOV NTA Conference 11/11/2016 Anita Yadavalli Indiana Legislative Services Agency 8