February, 2008

Mercatus on Policy: All Go in the GO Zone?

Key materials
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In 2005, the Federal Government created the Gulf Opportunity (GO) Zone to spur Gulf Coast recovery. The GO Zone designation gave these hurricane-affected areas special tax incentives and the authority to issue tax-exempt bonds. State and federal policy makers favor such geographically targeted tax incentives believing that they stimulate economic development. However, evaluations of the success of other similar approaches show mixed results. While it is too early to assess the GO Zone directly, the performance of other federal zones offers some guidance on the overall effectiveness of tax incentive programs.