Wisconsin Governor Proposes Investor Tax Credit Expansion, Funds for Advanced Workforce Training

Gov. Jim Doyle unveiled today an economic stimulus plan for Wisconsin that includes a proposal to enhance tax credits for angel and venture investors in support of start-up technology companies. A coalition assembled to improve Wisconsin's existing investor tax credits law applauded the governor's announcement to refine the four-year-old program.

The Wisconsin Growth Capital Coalition, which is comprised of nearly 30 public/private TBED organizations and investment funds, have suggested specific improvements in Wisconsin's investor tax credits law to encourage angel and venture capitalists to invest in qualified early-stage deals.

Wisconsin's investor tax credits law, sometimes known as the Act 255 tax credit law, currently grants 25 percent credits spread over two years. The program is credited with helping to nearly triple early-stage investments by angel investors and venture capitalists in Wisconsin companies since its enactment.

In 2007, early-stage investments in Wisconsin reached $147 million, according to a report by the Wisconsin Angel Network, which found the dollars spread over scores of deals in high-growth businesses ranging from advanced manufacturing to biotechnology to information technology.

The changes proposed in the state stimulus package would expand credits available to angel investors to $18.25 million and $18.75 million for venture investors, essentially tripling the current aggregate total of $11.5 million per year.  The credits would be transferable by investors within certain parameters set by the state and could be applied against premium and franchise taxes paid by insurance companies. Additionally, the legislation seeks to:

• Delete the per-angel investment cap for an individual business;
• Expand eligibility to a broad array of leading-edge technologies and businesses, including clean energy and nanotechnology;
• Allocate $500,000 annually for investments in nanotechnology businesses;
• Allow a one-time transfer of early-stage seed credits to attract a much larger group of potential investors; and
• Improve utilization of the tax credits by authorizing the Department of Commerce to prequalify the amount of creditable investment allowed in each business.

Members of the coalition believe improvements in Wisconsin's investor tax credits law would continue the recent growth of the state's high-growth, early stage sector and better position companies in that sector to attract investment from investors within and outside Wisconsin.

To help jump-start the state's economy, the proposed stimulus plan would provide additional funding of $1 million to increase Workforce Advancement Training Grants awarded by the Wisconsin Technical College System. The additional funds would be allocated for advanced manufacturing skills and training. Also, the plan calls for expanding access to capital for scientific, medical and technological research by allowing the Wisconsin Health and Educational Facilities Authority to issue federal tax-free bonds to finance projects and outstanding debt related to research facilities.

View the governor's letter to the legislature: http://www.wisgov.state.wi.us/docview.asp?docid=15919