State Rep. Stan Saylor (R-York) is again pushing legislation to set up tax credits for early-stage angel investors.
The bill, which was referred Wednesday to the House Commerce Committee, passed the House in the last two legislative sessions. It calls for a tax credit of 25 percent of the initial angel investment to go back to the investor, an effort to stimulate economic growth in startup businesses.
“I have long been a supporter of small businesses and startups who create 99 percent of all net new jobs here in Pennsylvania,” Saylor said via email. “Studies indicate their main challenge in growing and adding jobs is capital. … I don’t believe there is a huge issue with the bill other that we cannot reach floor consideration in the Senate. This time around, I will be reaching out to the new Senate Leadership and asking for consideration of the bill.”
In the bill, an angel investor is defined as someone whose net worth (combined with a spouse) exceeds $1 million, or whose individual income surpasses $200,000 for the last two years ($300,000 combined with a spouse).
The business being invested in would have to be headquartered in Pennsylvania, then stay in Pennsylvania for at least five years. It cannot have been in operation more than five consecutive years.
The bill died in the Senate the past two terms. In the new bill, language regarding repayment of the tax credit is tightened.
In the new version, if the investment is withdrawn at any time before or during the year the tax credit is claimed, a portion or all of the tax credit must be repaid, depending on when the withdrawal occurs.
The bill is similar to ones that have been passed in more than a dozen other states.