Federal Tax Incentives for Regional Growth

Abstract

In recent years the federal government has recognized, and begun to respond to, the problem of regional poverty and unemployment. The beginning of the federal commitment to alleviating regional underdevelopment probably lies in the Employment Act of 1946, but it was not until the 1960 Presidential campaign that the poverty and depression of Appalachia were brought to national attention. Passage of the Area Redevelopment Act in 1961 established the principle that federal funds should be used to aid the growth of lagging regions. The regional nature of Appalachian underdevelopment was formally recognized in the Appalachian Regional Development Act of 1965, which established the Appalachian Regional Commission as a joint federalstate agency to coordinate development activities. In the same year Title V of the Public Works and Economic Development Act organized regional commissions for several other multistate regions1 of extensive poverty and high unemployment, and established the Economic Development Administration's responsibility for federal policy vis-a-vis smaller regions of poverty. In addition to serving as liaison between the states and the federal government, the six regional commissions and EDA have principally followed the policy of making selective grants for public facilities development in communications, transportation, health and education. One policy alternative that is frequently suggested is the use of federal tax abatement to spur regional