Entrepreneur ‘not too concerned’ about investment tax credit expiration
A tax credit that acted as an incentive for investors to take financial risks on start-up businesses was not renewed as part of this year’s tax reform initiative, a senior adviser to the governor said Friday.
The expiration of the tax credit was a concern for some investors at last week’s CED Tech Venture Conference in Raleigh, which brought start-up companies as well together with potential business investors.
Tony Almeida, senior adviser to Gov. Pat McCrory on jobs and the economy, said lawmakers’ tax reform effort this year was meant to eliminate tax “loopholes.” As part of that effort, he said lawmakers allowed that tax credit to expire.
Legislation passed the Republican-led N.C. General Assembly that was later signed by Gov. Pat McCrory that lowered the corporate income tax and also flattened out the personal income tax to a single rate starting next year.
The tax credit for business investments was not included in that legislation. It had already been set to expire, and was not renewed.
Almeida said that while some venture capitalists viewed the credit as important, he also said it was also not fully used in recent years.
The credit, which expires Jan. 1, is for 25 percent of an investment or $50,000, whichever is less. The total amount of credit awards per year is capped at $7.5 million.
Almeida said tax reform benefited investors in other ways, but also said that as legislators see the effect of it, they may need to do some “tweaking.”
Durham entrepreneur Aaron Houghton said in an email that he’s “not too concerned” about the credit’s expiration.
Houghton was the co-founder of iContact, an email marketing company that sold last year to Maryland-based Vocus Inc. He’s now at the helm of another start-up called BoostSuite that has about 10,000 customers for software that helps small businesses get more sales from their websites. The company was one of the start-ups at the CED Tech Venture Conference 2013.
“Maybe I’m naïve, but most angel investors I know do it for lots of reasons other than getting tax credits,” Houghton said in an email. “Usually personal motivation, interest, entertainment, long-term capital gain, etc., are the primary driving factors.”
He added that if an investor loses all the money he or she puts into a start-up, it doesn’t help that much that he or she “saved 25 percent of it in taxes a few years ago.”