Free Enterprise Zone Act

Free Enterprise Zone Act - Title I: Designation of Private Jobs and Enterprise Zones - Amends the Internal Revenue Code to provide for the designation of private jobs and enterprise zones, for a 20 year period, by local governments or by State governments on behalf of local governments subject to the approval of the Secretary of Commerce, for purposes of extending the tax incentives provided by title II of this Act to employers and employees within such designated zones. Specifies that the Secretary may only approve the designation of such zones if: (1) the area is within the jurisdiction of the designating local government; (2) the boundary of the area is continuous; (3) the area has a population of at least 2,000, or is an Indian reservation; and (4) the area meets specified unemployment and poverty requirements. Requires designating local governments, as a condition of the Secretary's approval, to effect a permanent real property tax reduction in their respective jurisdictions, which is not less than 50 percent of the current effective rate.

Expresses the sense of the Congress that in the case of any application for designation of an area in a private jobs and enterprise zone as a foreign trade zone: (1) the Foreign Trade Zone Board should expedite the application process; and (2) the Board, in evaluating such application, should consider not only the current economic conditions within the zone, but also future development to be expected as a result of the incentives provided by this Act.

Title II: Tax Incentives - Amends the Internal Revenue Code to eliminate social security taxes in designated private jobs and enterprise zones.

Reduces the rate of tax on the capital gains of corporations in such zones and eliminates capital gains taxes for individual taxpayers in such zones. Exempts gain from the sale or exchange of property used in a business in a private jobs and enterprise zone from the computation of the minimum tax. Reduces the rate of tax on the income of corporations whose workforce comprises at least 50 percent of individuals working in a private jobs and enterprise zone (qualifying businesses).

Authorizes accelerated depreciation for qualifying business (straight line method based on a one year useful life). Allows a full investment tax credit for such property despite election of such accelerated depreciation.

Permits qualifying businesses to elect to use a cash method of accounting.

Allows a ten year carryover of net operating losses for qualifying businesses.

Exempts private jobs and enterprise zones, which are certified by the Secretary, from the application of the minimum wage law and the Occupational Safety and Health Act.

Title III: Effective Date - Specifies effective dates for provisions of this Act which apply to income tax, social security taxes, and tax procedure and administration.