Establishes an angel tax credit for investors who invest in certified startup business enterprises

6 Co-sponsors

• Simcha Felder
• Patrick M. Gallivan
• George D. Maziarz
• Ted O'Brien
• James L. Seward
• David J. Valesky

BILL NUMBER:S3732C

Title of bill

An act to amend the economic development law and the tax law, in relation to establishing an angel tax credit for investments made in small businesses

Purpose or general idea of bill

To establish an angel tax credit for investors who invest in certified startup business enterprises.

Summary of specific provisions

This bill creates a new angel tax credit that provides incentives for investment in targeted industries and technologies which is available in other states. The bill authorizes the Commissioner of Economic Develop- ment to certify Startup Business Enterprises(SBE) and allocates $7 million in total Angel Tax Credits each year. The minimum investment is $100,000 and is capped at $1 million in qualifying contributions to capital; and no single certified SBE will be eligible for more than $1 million in qualifying contributions. The investor is provided with a refundable credit equal to 35 percent of such investor's qualifying investment (i.e. a $1 million capital investment would result in a $350,000 credit) The credit is available to Article 9-A, Article 22, Article 32, and Article 33 taxpayers.

Justification

New York State small businesses are at a disadvantage to those located in other states which offer tax credits like the Angel Tax Credit due to the lack of both public and private investment dollars. Other states have economic development programs, as well as angel tax credits, that support both business development and business attraction efforts. In New York this results in a continued lack of private investment in early stage companies often stunting their growth and causing them to lag behind their competition.

In the past decade, more than 20 states have implemented programs to both attract and or retain investment capital using tax credits, which reduce the risk and cost of these ventures.

To become more competitive, New York State needs to create a tax envi- ronment that promotes private investment within emerging business. This bill will facilitate job growth and a more diverse statewide economy.

Prior legislative history

S.6837/A.9939

Fiscal implications

Assuming the Commissioner of Economic Development allocates $7 million of Angel Tax Credits each year of the three year period and each such Certified SBE raises the maximum $1,000,000 in capital contributions based upon the credits, the total annual cost to the State of New York credits would be $7 million with a total cost over three years of $21 million.

Effective date

Immediately.