Supporters of special-interest tax breaks for wealthy “angel” investors in South Carolina will have to regroup in 2013 if they are to get the subsidies enacted into law.
Reportedly the backers will do so.
The proposed incentives came close to passing this year and might have made it through the General Assembly were it not for father time.
A House-passed bill to provide the tax breaks was one vote shy of emerging from the Senate when the clock ran out on this year’s regular legislative session last week.
That left unknown whether there would be a floor fight in the Senate over the bill, H. 3779.
Other incentives legislation, including an 11th-hour tax favor for the state’s tire producers that the Legislature passed blazingly fast last week, has provoked opposition in the Senate, where one member can block a bill.
But the angel tax credits measure did not get to a final vote and floor debate in the chamber.
“We will come back next year and be very focused on getting it through early in the session,” Wayne Roper, president of SCBIO, a Greenville-based coalition representing the state’s life sciences industry, told the Columbia Regional Business Report earlier this week.
Bills that pass often do so after two or three unsuccessful efforts to get them through.
Given that general pattern, and how close the angel tax credits bill got, it would seem to have good prospects if it’s reintroduced in 2013.
Angel investing is a high-risk, high-reward form of venture capital. It involves lending by high net worth individuals to seemingly promising start-up companies that are too new to land conventional forms of credit.
The bill, sponsored by Rep. Joan Brady, would have provided up to $5 million per year in state tax credits for angel investing – and reduced annual state collections by the same amount.
Under the proposal, a qualified investor could claim up to $100,000 in credits per year.
Supporters say the bill is needed to help fill a venture capital void in the Palmetto State.
Opponents contend that it is antithetical to a free market.
Yet regardless of where state taxpayers come down on the issue philosophically, as The Nerve reported in this May 15 article, any venture capital shortage in South Carolina might not be so severe after all.
Advocates for the bill, using refrains in the language of government giveaways for economic development, couched it as job creation legislation.
“Angel investing is critical to creating jobs in South Carolina,” says a two-page talking points paper about the bill distributed to legislators.
The handout bears the logos of SCBIO, two angel investing groups in the state – Charleston Angel Partners and the Upstate Carolina Angel Network – and some of the usual suspects in the corporate welfare game in these parts.
Those include New Carolina, the state Chamber of Commerce and the South Carolina Economic Developers’ Association.
The two-pager spins the angel tax credits bill to the contrary, however. “Angel credits allow the market, not government, to pick winners,” it says.
It does not explain that the bill essentially would have the state treasury guarantee up to $5 million per year in this highly speculative, risky form of venture capital.
Reach Ward at 803-254-4411 or firstname.lastname@example.org.