Viewpoint: 'Angel Investor' tax credit will grow business in Minnesota
Let it not be said that bipartisanship and compromise are dead at the state Capitol.
Late last month, I had the honor of standing next to Gov. Tim Pawlenty as he signed into law a major job creation bill that will grow our economy and put Minnesotans back to work.
The bill represents several years of work and significant input from the business community, investors, state and local government leaders, labor organizations, and many other stakeholders.
Passage of the bill early in the session capped off an extremely productive start to this year's legislative work, which has already seen bipartisan agreement on issues as far-ranging as reducing the deficit, health care, and economic development.
The legislation signed by the governor has the potential to create up to 20,000 new jobs in the state. The centerpiece of the bill - the establishment of an "Angel Investor" Tax Credit - is legislation which I have authored for the past three years.
Over the interim, I convened a team to ensure early success in 2010, building on support from LifeScience Alley, Minnesota High Tech Association, BioBusiness Alliance, Minnesota Chamber of Commerce, Minnesota Business Partnership, Economic Development Association of Minnesota, and Mojo Minnesota.
For too long, Minnesota has stood on the sidelines as 29 other states (including Wisconsin) have used similar tax credits to lure private investments in small, start-up companies. In meeting with entrepreneurs from these early-stage companies, it was painfully obvious that Minnesota was missing a critical economic development tool. This new legislation will make Minnesota far more competitive with other states that already offer these incentives. Offering investors a 25-percent tax credit for investing in our most promising homegrown high-technology, bioscience, alternative energy, and green manufacturing companies, will mean significant new early-stage seed capitol for businesses that want to stay and grow in Minnesota. In 2010, angel tax credits will leverage $44 million in private investments in emerging Minnesota companies.
The state Department of Employment and Economic Development estimates the Angel Investor Tax Credit will create more than 6,000 new jobs with an average annual wage of $49,000. Even more promising, the tax credit will make it easier for start-up companies in Minnesota to find private investors, helping them avoid the "valley of death" between having a technological breakthrough and getting a product to market. This makes it far more likely that great ideas coming from research at the University of Minnesota or MnSCU campuses don't have to go elsewhere, but will have the resources necessary to become the next 3M or Medtronic, right in our backyard.
Also included in the bill are:
A doubling of the Research and Development Tax Credit, which will benefit both existing corporations and smaller start-up companies. This tax credit makes it easier for businesses to invest in their future, by redirecting profits towards discovering new technologies and products.
A Historic Structure Rehabilitation Credit that is expected to create up to 1,500 new Minnesota jobs in our building trades and design sectors which are facing particularly high unemployment rates. It's modeled after a similar federal tax credit, which offers incentives for improving our aging historic buildings.
Several local economic development provisions that will advance important business projects across the state. One such provision is designed to attract a new wind-turbine manufacturing facility and headquarters to Minnesota.
Together, these provisions will help grow our already successful medical device and bioscience industries, while ensuring that Minnesota can compete in the growing green jobs sector and exciting new areas such as nanotechnology. At the same time, the bill will provide some very near-term employment growth in industries that have suffered heavy job losses in our current recession.
None of this would have been possible without engaging our business, labor, and investment communities in the discussion, committing ourselves to working together and finding compromise, and putting aside any partisan differences for the good of Minnesota.
I think it's a positive sign when lawmakers can demonstrate they are getting things done by reaching an agreement on the most important issue of the day for our families: growing jobs and getting our economy moving again.
Kathy Saltzman is the state senator for District 56, which includes Woodbury.