Pro-life group wants tax-credit to exclude research on human cloning, stem cell
‘Angel networks’ legislation panned
Sunday, February 2, 2014
A tax-credit bill that would benefit technology startups and their investors passed out of committee this week with strong bipartisan support, but Missouri Right to Life has raised a stir over pro-life protective language they want included in the legislation, and any new tax credits are a heavy lift in the Senate.
Susan Klein of the pro-life group testified against the measure at its first hearing of the session with the small business committee and at an economic development hearing, where the program is included in a much larger tax credits package.
The language she has asked to be included in the bill would explicitly bar the program from applying to companies that conduct research into human cloning or embryonic stem cells and has been included in previous legislation like the Missouri Works program.
“It’s better if there is even a question … for that protective language to be there, so that our state dollars aren’t spent on unethical research,” Klein said.
But the bill’s sponsor, Rep. Noel Torpey, R-Independence, said he is confident the protections Klein is looking for are already included through appropriations bills, and he was disappointed she didn’t raise the concern prior to the public hearings.
“If they really were concerned with policy, don’t you think they would have talked to the sponsor or the chair of the committee… and she never did that,” Torpey said. “It’s not about policy, it’s about politics … she should be ashamed.”
On Thursday, Klein rejected that politics were at play, and said the organization was prepared to stand against the bill until the protective language was included.
“Our lawyers believe that when you look at specific programs, you need to give clear direction within programs how to spend our state dollars,” Klein said.
The bill may also face challenges in the Senate. While it passed out of the House eight different times last session, it has fallen victim to a general distaste of tax credits among some state senators.
“It has always died in the past because of the constant battle regarding economic development,” said Sen. Jolie Justus, D-Kansas City, who has filed her own version of the bill in the Senate. “I think it’s going to be difficult to get a new tax credit passed until the folks who want to reform our existing programs are satisfied.”
Justus and Torpey think the program would be acceptable to the Senate but also think broader reforms are likely necessary before it could gain passage.
“At the end of the day, in the Senate they are going to have to look at tax credit reforms,” Torpey said. “I’m not sure if economic development bills are going to pass until we look at that issue as a whole.”
‘Filling a gap’
The bill’s proponents say the goal is to provide incentives to help “fill a gap” in business investment that is larger than what is usually provided by friends and families in the earliest days of a startup but still short of the much larger investments and loans provided by venture capital firms and banks.
Jake Halliday, who runs the business incubator at MU, said “angel network” investors make small and targeted investments in businesses with high growth potential. He said a Columbia-based group of angel investors he is a part of has invested in a cancer drug company, energy companies, agriculture and veterinary businesses and several software and new media ventures.
“There is a public purpose in stimulating more new venture creation and if these angels are taking such high risk with such high public benefit (they should receive tax credits),” Halliday said.
Currently, very few of the people who could qualify as angel investors actually do so, Halliday said, and a major advantage of the tax credit would be to bring those people off the sidelines.
“One of the impacts of incentives is that more people would be drawn in and learn the angel investment process, and more startups would benefit,” he said.
He also highlighted competition from Kansas, where a similar tax credit program has been in place since 2005.
“We hear the sucking sound pretty well in Columbia,” where, he said, two companies that began as spinoffs of MU research recently moved to Kansas to take advantage of that state’s angel investments tax credits. “If I thought about it longer, there are probably more than two.”
In Kansas, more than 200 taxpayers have claimed credits through the program each year since 2008. The total amount of credits that were subtracted from tax liabilities in those years ranged from $3.3 million to $4.6 million. In some cases, credits were enough to entirely wipe out what a taxpayer owed the state.
Missouri’s bill would cap the total number of credits each year at $6 million, but unused credits could roll over and be claimed the following year. Each investor could receive credits up to $50,000 for an investment in one business and up to $250,000 total each year. The credit would be worth half the amount of their investment. The program would sunset at the end of 2024.
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