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Destination Pennsylvania (cover)
'Tax-Free' Zones Create Opportunity
Pennsylvania Goes Haywire for High-tech
Philadelphia Wins Big
Lehigh Valley
Williamsport-Lycoming
Pittsburgh, Southwest Pennsylvania
PP&L Powers up Its
Efforts in Central PA

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'Tax-Free' Zones Create Opportunity

In February, Gov. Ridge launched the new "tax-free" zones initiative, making Pennsylvania only the second U.S. state with such a program (Michigan was the first with its Renaissance Zones program in 1997).Costs of Living Designed to revive economically distressed communities throughout the state, the KOZ initiative created 12 defined, limited zones, with greatly reduced or no tax burden for residents or businesses located within the area. Under the KOZ initiative, state corporate net income, capital stock and franchise, and personal income taxes are waived for 12 years for employers and residents located within the designated opportunity zones.

The 12 zones incorporate 26,000 acres (10,530 hectares) of land and include 118 sub-zones. Of Pennsylvania's 67 counties, 54 of them will participate in the KOZ program. "We're really excited, because the concept here is to use areas of brownfields," says McCullough. "So, it's kind of a two-sided effect: No. 1 is economic development, creating new jobs and ultimately taxable businesses. Secondly, this will put a stall on sprawl, because the advantage of having a tax-free situation is great."

The idea behind this program is that the state will not lose too much income from taxes since there is little business or development in those zones anyway. And by providing the "tax-free" zones, businesses will locate in the zones to take advantage of the tax situation. After the 12-year, tax-free period ends, the companies will become growing, tax-paying firms, providing both tax money and jobs for the local economy.

The idea has gone over well with business, says McCullough. "We've had people clamoring, but we can't really fund anything until the next fiscal year starts, which is July 1," he adds.

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