Skogen: DEED tour highlights need for angel investor tax credit
In June, Minnesota's unemployment rate reached a 26-year high, with initial claims for Unemployment Insurance up more than 85 percent in the past year. A business survey was also released that showed Minnesota's economy lagging behind our neighboring states.
In light of this troubling news, Minnesota Department of Employment and Economic Development Commissioner Dan McElroy has been traveling the state to discuss how the department is spending federal stimulus dollars on businesses and workforce development.
During their regional meetings, officials from DEED highlighted the need for an "angel investor" tax credit which would provide an incentive for investors willing to put money into start-up companies in emerging and high-tech industries.
An "angel investor" is usually an individual or a group of individuals who provide funds for business start-ups in exchange for ownership equity or debt that can be converted into stock. Other states in the region have already passed an angel investor tax credit. In May, a University of Minnesota spin-off biotech company announced tentative plans to move to Wisconsin, specifically citing the state's angel investor tax credit as reason for the transition.
"The American Recovery and Reinvestment Act is helpful as a stopgap measure to keep people employed and to address some infrastructure needs, but our state's economy needs long-term solutions," said Sen. Dan Skogen. "Minnesota is no longer a leader in economic growth and worker prosperity. We need solutions for fixing our economy and growing jobs. Tax incentives for investments in new Minnesota start-ups will help accomplish that."
In both 2007 and 2009, the Minnesota Legislature passed an angel investor tax credit provision only to see the measure get caught up in budget negotiations and was ultimately vetoed by the governor. The bill vetoed in 2009 contained a total of $247 million in business and job-growing incentives, which included an up-front sales tax exemption on capital equipment, and a separate tax credit that would have generated even greater private investment in Minnesota small businesses.
"In order to keep our state competitive, we need to be attracting and retaining companies that will build jobs for the long haul. Energy, medical technology, biosciences, and biofuels are examples," Skogen said. "This is a measure that is too important for the state's economic growth for it to fall to political gamesmanship."
"It is important for the Senate, House and governor to work together to pass job-creating legislation," Skogen said. "We need solutions -- and incentives like this are one of the solutions."