Looming tax credit expiration raises concerns
The expiration of a tax credit that acted as an incentive for investors to take risks on new businesses was a concern for some at a conference that drew entrepreneurs and investors to Raleigh on Wednesday.
Joan Siefert Rose, president of the Durham-based Council for Entrepreneurial Development, said she heard concerns about the expiration of the credit at the CED Tech Venture Conference 2013, which was held at the Raleigh Convention Center. She said the credit acted as an incentive for investors to take risk in early-stage ventures in North Carolina.
Now set to expire Jan. 1, the credit allows investors to get a tax credit for 25 percent of amount of their total investment or $50,000, whichever is less. The total amount in credits given out each year is capped at $7.5 million.
Trevor Johnson, a spokesman for the N.C. Department of Revenue, said the credit was originally set to expire this year, but it was extended for one year. Lawmakers did not act to extend the expiration again.
Craig Stone, founder of the member-managed investment fund Triangle Angel Partners, said at the conference Wednesday that the credit helped investors take a risk in companies at early stages. He said few companies make it at that stage, but investors look to make those kind of high-risk investments in the hopes of hitting a home run.
He said he expects to see fewer start-ups get funding from angel investors due to the expiration.
He also presented his concerns in juxtaposition to comments made by Gov. Pat McCrory at the conference for support for entrepreneurs.
McCrory touted tax reform and other initiatives that he said were aimed at encouraging business growth.
The legislation that he signed earlier this year will lower the corporate income tax and also will flatten the personal income tax to a single rate starting next year.
McCrory also said he “firmly believe(s) we need to reward people who make things, build things” and that the state needs to update its brand to remain competitive.
“I’m convinced that (any) city and state or that government, if you’re satisfied with the status quo, you’re not going to be staying in business too long,” he said. “Those that adapt to change, plan for change and even use change to your advantage, will be those that survive for the future. We cannot live off of our past brand.”
Attempts to reach McCrory and other lawmakers for comment on Wednesday were not successful.