TRENTON – Legislation sponsored by Senator Fred Madden (D-Gloucester/Camden) that will provide an incentive for investment groups and individuals to invest in the state’s emerging technology businesses was approved today by the full Senate.
Also known as the “New Jersey Angel Investor Tax Credit Act”, the bill (S-3055) would create specific gross income and corporate business tax credits for start-up investments of up to $500,000 made in New Jersey-based high-tech and biotechnology companies. So-called “angel investors” are individual entrepreneurs – or groups – who provide the massive capital investments that start-up technology businesses need to get up and running.
“Angel investors provide the capital necessary to spur high-tech businesses and create new technologies,” said Madden. “Offering tax credits to potential investors will serve as an incentive for them to invest in start-up science and technology businesses, which will fuel growth in this sector to create good-paying jobs for our residents and contribute to the overall wellbeing of our state.”
According to a 2008 report from the Angel Capital Education Foundation, more than 20 states have implemented programs to attract or retain investment capital through income tax credits in the past decade with the belief that the reduced risk and cost of investing will encourage more entrepreneurial activity in high-growth small businesses and ultimately attract investment dollars, create jobs, and contribute to the economic growth of the state.
Because the science and technology sectors have a high potential for growth and are identified as creators of high-paying jobs, they are an ideal candidate for sector specific tax credits. New Jersey has historically been one of the top destination states for science and technology companies. However, other states have been gaining ground in recent decades. This bill would help spur investment and growth in science and technology, allowing New Jersey to maintain its position as a hub for these sectors.
“For New Jersey to maintain its position as a leader in the science and technology sector, we must ensure that our policies remain competitive,” said Senator Madden. “This tax-credit program will provide the edge we need to attract investment in these businesses, which have a high potential for growth and serve as a creator of high-paying jobs.”
The measure now heads to the Assembly for consideration.