In the last decade, most states have targeted certain depressed areas for revitalization by providing a combination of labor and capital tax incentives to firms operating in an "enterprise zone" (EZ). Britain is also completing a federal program that designated zones for a ten-year period. These zone experiments can add to our understanding of the influence of tax policy on business investment, and provide insights into the design and implementation of federal programs with similar objectives. This paper summarizes the theory and empirical evidence on the operational success of these EZ programs. Economic theory predicts that the effect of tax incentives on zone wages and employment will depend on the elasticity of supply of factors to the zone and on the elasticity of demand for zone output. For plausible parameter values, a labor subsidy or an equal-cost subsidy to zone capital and zone resident labor will raise zone wages. A capital subsidy alone may actually reduce zone wages. Employment effects are likely to be small if labor is inelastically supplied. The British national EZ program was intended to promote new economic activity in vacant areas with little or no industry and few residents. Studies of this program found that between 50 and 80 percent of zone businesses were relocations, at an annual cost per job of approximately $15,000.