30 Mar Burke would like to double Act 255 angel tax credits
State commerce secretary Mary Burke said this week that she would like Wisconsin to double the amount of tax credits available to angel investors under the Act 255 program.
In an interview, Burke said funding increases would be contingent on the state’s fiscal health, but she would like to double the tax credits from the $3 million allocated in the current biennial budget. Under Act 255, which had bipartisan support, the state made available $65 million in tax credits over 10 years to encourage angel investors and venture capitalists to invest more in Wisconsin.
Burke noted that all the angel tax credits available in the current budget were used in the first year, a sign that the credits are an effective strategy to boost investment in early-stage companies.
The tax credits were used even though they were not promoted to any great extent, which tells Burke that the state is just scratching the surface. “It leverages 3 to 1 the private investment, so you know it’s going into the companies,” she said.
Under Doyle, the state’s economic development strategy is to hold the line on state taxes while working to increase per capita income. The state’s superintendent of public instruction, Elizabeth Burmaster, sees a need for more residents with bachelor’s degrees, which would translate into higher incomes.
Part of the strategy is to drive the retention and creation of well-paying jobs, which is where Act 255 comes in.
While angel investors committed $18 billion to early-stage companies in 2003, only 2 percent of the money invested by venture capitalists, also $18 billion, went to start-up companies that year, so the state is trying to pick up the slack. In addition to the tax credits established under Act 255, the Wisconsin Angel Network was created to develop an online inventory of early-stage companies. WAN, in turn, has created a deal-flow pipeline to help angel networks find entrepreneurial deals here.
One potential challenge to making more tax credits available under Act 255 is the state’s increasing funding of public education. The governor’s approach to controlling property taxes at the local level was centered around an $861 million boost in the state’s share of K-12 education funding, which could “crowd out” other investments in the next budget.
Doyle, speaking Tuesday at the Wisconsin Innovates Conference, said that commitment to K-12 would continue, especially following his recent trip to Ireland, whose economic resurgence has made headlines worldwide. He said Ireland’s renaissance from one of the poorest nations in the European Union to the second richest actually began 30 years ago, when it made a massive commitment to public education.
The second piece, he said, is Ireland’s singular focus on economic development, and a third element is the consensus that has developed across political lines. “It didn’t matter what the political party was,” Doyle said. “They would talk in the same language about economic development, high-end economic development.”
More on Act 255 and investment:
• State tracks more angel investment, at least $19M last year
• Act 255 clean-up law makes incentives work for VC funds
• Act 255 heats up angel investment in 2005, though VC involvement lags