25 Jun Senator Kreitlow urges passage of capital formation proposals
Madison, Wis. – The Wisconsin Legislature should continue to make expanding access to capital a priority in the next legislative session, according to State Sen. Pat Kreitlow, D-Chippewa Falls.
Kreitlow, citing a recent report on risk capital, remarked that the state’s strategy of providing tax credits and targeted tax exemptions have proven to be effective tools in encouraging investment.
He referred to a report by NorthStar Economics and the Wisconsin Technology Council that said Wisconsin raised a record-high $147 million in risk capital last year.
“This report shows us that Wisconsin is finally making gains in the amount of risk capitol investment happening here in the state,” he wrote in an e-mail to WTN. “These numbers make it clear that the policies implemented over the last few years have made Wisconsin a much more investment-friendly state.”
The Legislature does not reconvene until early 2009, but lawmakers already are using the risk capital report to build support for various economic packages.
Following the release of the report, State Senator Ted Kanavas called on the Senate to take up legislation to introduced by Republicans and Gov. Jim Doyle that would expand the Act 255 tax credit program and establish a capital gains tax exclusion. The packages are designed to further increase investment in a state that historically ranks low in capital deployment metrics.
The “Accelerate Wisconsin” package introduced by Doyle passed the Assembly earlier this year, but the Senate did not act on it. The Senate’s top priority last spring was its Healthy Wisconsin proposal to provide universal health insurance coverage, which Senate Democrats argued would help small businesses deal with the high cost of providing health insurance coverage to their employees.
Kreitlow indicated the results of the risk capital study would help the Legislature move forward on a number of economic stimulus plans that were stalled last session, including the tax credits for research and development and the tax exemptions for the biotechnology industry that he introduced with Kanavas.
“The Legislature should continue to make expanding access to these types of programs a priority next session,” Kreitlow wrote.
Under Doyle’s plan, the state would increase the total amount of angel investor and venture capital tax credits available to businesses to $100 million, which would leverage a minimum of $400 million in private investment. The Governor also would raise the current cap of $1 million in tax-creditable angel investment per business to $4 million, allowing start-up companies to receive financing from any combination of angel or venture investors to the maximum of $4 million.
The state Department of Commerce has thus far qualified 80 early-stage businesses as eligible for the tax-credit program.
In addition to the proposed expansion of Act 255, Doyle has put forth a capital gains re-investment initiative would give individuals a limited, 100 percent capital gains exclusion of up to $10 million for long-term capital gains reinvested in qualifying Wisconsin businesses.
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