TRENTON, N.J. – Looking to get a higher rate of return on state investments by providing increased tax credits to newer, growing companies, state Sen. Kristin Corrado and Assemblymen Christopher DePhillips and Kevin J. Rooney introduced a bill (S2298/A3677) Monday increasing the tax credit under the New Jersey Angel Investor Tax Credit Act from 10 to 25 percent.
“The Angel Tax credit is an investment incentive to benefit startups in New Jersey’s developing technological industry,” said Corrado (R-Passaic). “This legislation is a win-win, enabling entrepreneurs to pursue business in the innovative technology sector as well as allowing investors to fund and profit from New Jersey’s up and coming companies.”
The program offers a refundable credit against state corporation business or income tax for private investments in an emerging technology business with a physical presence in New Jersey. Run by the New Jersey Economic Development Authority in consultation with the New Jersey Division of Taxation, the program focuses on start-ups with fewer than 225 employees in the fields of research, manufacturing or technology commercialization.
“This bill will allow us to maintain our competitive advantage over surrounding states,” said DePhillips (R-Bergen). “The change to the Angel Tax Credit program will incentivize life science companies and angel investors to come to New Jersey, stay and invest here. We need to keep innovative industries here.
“During my time on the New Jersey Biotechnology Task Force I have heard from state leaders in higher education and professionals in the life sciences industry and there is an overwhelming demand for private investment,” continued DePhillips. “This bill will help facilitate increased investments within New Jersey.”
“Tax incentives help boost the economy, but they need to be directed towards the companies that will produce the greatest benefit,” said Rooney (R-Bergen). “Right now, New Jersey has the nation’s worst business climate ranking 50th in our nation. We need to attract angel investors and cutting-edge technology businesses with sustained growth. We need to make these tax credits work for us.”
An economic report by McKinsey & Co., an international management consulting firm, showed New Jersey’s slow growth is the result of a lack of fast-growing young firms and a higher proportion of older corporations. The report, cited in a NJSpotlight article, noted that young companies can quickly double in size and add jobs for many years while mature businesses generate few new jobs.
The report revealed that older domestic companies have received more than 80 percent of the state’s tax incentives since 2013 “even though younger firms and foreign companies, on average, invest more capital in operations and create more jobs.”