The legislatively restored angel tax credit is not a “tax break for businesses” (Arizona Daily Star, May 11, 2017). It is an essential economic-development tool that will stimulate the creation of well-paying and sustainable jobs in today’s rapidly changing knowledge-based economy. These will be jobs that require skills; pay a decent wage and provide benefits; and will allow our children to stay here in Arizona instead of having to move to California, Washington or some other state to earn a decent living.
Job creation in today’s competitive world economy requires access to new ideas, a skilled and energized workforce and, of equal importance, capital. Southern Arizona is well positioned to prosper in the new economy. We have what it takes to compete with other regions that can’t offer the quality of life that we enjoy. But access to capital continues to be a challenge.
We have an abundance of new ideas. The University of Arizona is a world-class research university generating cutting edge, commercially viable technologies. The UA’s Tech Launch Arizona has been extremely effective in transforming University generated knowledge and technology into the companies that will fuel our economy in the future.
The top-ranked McGuire Center for Entrepreneurship is a factory of new and exciting ideas and business concepts. The University’s James E. Rogers College of Law was recently designated as the location of the Arizona Public Patent Program by the United States Patent and Trademark Office.
We have a vibrant entrepreneurial community supported by organizations such as StartUp Tucson and Thryve and a nationally acclaimed incubator at the University Science and Tech Park. But the new companies spun out of the university or formed by our inspired young entrepreneurs will require capital to grow and thrive.
The tax credit provides an additional incentive for Arizona investors to invest in qualified Arizona start-up and early stage companies having great potential to strengthen our economy.
The angel tax credit has been around since 2006. To qualify for the credit, an investment must be made in an Arizona company doing business in a non-retail industry having job-creation potential.
We are fortunate to have an existing investment base in Southern Arizona ready and willing to support our growing entrepreneurial community. The Desert Angels, a group of local qualified investors, has been investing in Tucson high-tech businesses for over fifteen years. Since 2010, members of the Desert Angels have invested over $31.5 million in 67 companies. Most of these companies are located in Arizona. These are companies having the potential to create prosperity for the entire community. But these are start-ups; investors are making risky investments. The tax credit helps to mitigate that risk at minimal impact to the state budget.
Curtis Gunn, Chairman of Desert Angels, observed that the rate of investment in local companies fell off dramatically when the angel tax credit program ran out of funding. According to Gunn, the availability of the tax credit is an important incentive for local investors considering an investment in a local company.
The Legislature was wise to provide continued funding for the important program. It is an investment in our future that will pay dividends for years to come.