MADISON — The board of directors of the Wisconsin Technology Council voted unanimously at its Jan. 8, 2008, meeting in Milwaukee to endorse the concept of several innovative proposals outlined by Gov. Jim Doyle in his Accelerate Wisconsin and Innovate Wisconsin proposals.
The council also supports similar concepts advanced by key legislators such as state Sen. Ted Kanavas, R-Brookfield, and Rep. Patricia Strachota, R-West Bend.
“Our board appreciates the attention the governor and key legislators have given to the vital topic of Wisconsin’s economic growth, and their willingness to take informed, creative positions on ideas that will help drive our economy,” Tech Council chairman Mark Bugher said.
The Tech Council board supported the concept of the following proposals, which must be submitted to the Legislature in order to begin the process of public debate and implementation:
- A capital gains tax initiative that will allow individuals, partnerships and limited liability corporations a limited 100 percent capital gains exclusion of up to $10 million for long-term capital gains reinvested in qualifying Wisconsin businesses. As the Tech Council noted in its December 2006 “white papers” report to the governor and the Legislature, a targeted capital-gains tax exclusion would “unlock” money that would be redirected to high-growth investments in Wisconsin, encourage investments in companies that produce high-end jobs, lower the cost of capital available to qualified entrepreneurs, and speed technology transfer.
- A doubling of technology grants and loans through the Wisconsin Department of Commerce, from $2.5 million to $5 million per year. These grants and loans are often some of the “first money in” for promising start-up firms, and a necessary precursor to future rounds of private investment.
- Changes in the law governing state tax credits for investors who invest in qualified start-up companies. Under several proposals, start-up companies could receive up to $4 million in tax-creditable investments from any combination of angel or venture investors. Current law contains specific caps related to the type of private equity investment, i.e., angel or venture. As the Tech Council noted in its December 2006 report, there have already been instances in which angel investors have been “capped out” in receiving tax credits for making follow-on investments in a start-up company. The 2007-2009 state budget already increased the total amount of investment tax credits available to angel and venture investors.
- Boosting industrial R&D spending by offering tax credits to companies that increase R&D spending by more than 25 percent over their three-year average. For each $1 over the 25 percent threshold, the state would offer $1 in tax credits, up to 50 percent of the company’s overall tax liability. Unused credits could be carried forward.
- Exempting from state sales taxes a manufacturer’s machines and equipment used in research and development. The same equipment would be exempted from property taxes. As the Tech Council noted in its report, “The Economic Value of Academic R&D in Wisconsin,” our state performs very well (12th per capita) in academic R&D spending, but is below average among the states in industrial R&D.
“Creating a capital gains tax exclusion would set Wisconsin apart in a very positive way,” Tech Council President Tom Still said. “It democratizes private equity investment by encouraging a whole new category of investors – those who may have made money on stocks, real estate or other property – to reinvest their money at home.”
The Tech Council is the independent, non-profit and non-partisan science and technology adviser to the governor and the Legislature.
Read more about the Tech Council and Gov. Doyle’s proposed initiatives at the Milwaukee Journal Sentinel Online.