Statements on Introduced Bills and Joint Resolutions
By Mr. PRYOR:
S. 256. A bill to amend the Internal Revenue Code of 1986 to allow a credit against income tax for equity investments in small business concerns; to the Committee on Finance.
Mr. PRYOR. Mr. President, we know we need to focus on cutting our spending. We know we need to focus on the tax reform effort. I think everybody generally agrees on that. Although they may disagree on what the particulars would be, they agree we need to do those two things. The third thing we also must do is to focus on the economy and jobs. This is something that we have seen in this country over the last 2 1/2 years, where we have gone through a very harsh, very difficult recession and we have seen an unemployment number that stays stubbornly high. We have seen a lot of topsy-turvy economic numbers over the last 2 1/2 years, and I believe the Congress--the House and Senate--and the White House need to set the table for job creation and economic growth in this country, and we need to do it in a very smart way.
Today, I am here to talk about the angel investment tax credit bill I am introducing. I want to encourage my colleagues to consider reading the bill and becoming cosponsors. I would love to be working on this over the next few weeks to get a broad base of support and to get as much emphasis on this effort as possible right now. It is one of many job-creating pieces of legislation I am interested in in this Congress, but I would love to get as many colleagues as possible interested now to look at this and see if it is something we could pass sooner, rather than later, around here.
The angel investment tax credit is modeled after the new market tax credit, and it would provide a 25-percent Federal income tax credit for investing in qualified early-stage small businesses. The focus will be on advanced manufacturing, aerospace, biotechnology, clean energy, and transportation. The bill would provide that up to $2 million per year in tax credit-eligible cash equity investments could be made, with a total of $10 million per small company. The goal would be that for every $1 we put in, there would be $4 of private-sector stimulus.
This is the private sector getting back on its feet with a little bit of grease provided by the government to get things going in the right direction through the Tax Code. The bill I have written would authorize $500 million per year for 5 years for these tax credits. As I said, this proposal is expected to stimulate $2 billion per year in new capital formation.
Let me give one quick example of how this can work. All these companies on this chart here started with an angel investment to get over the hump. What happens is someone will have a good idea. They think they can innovate, they think they can produce, they think they can have value in the marketplace, but they can't get the capital in order to get established. They can't quite get over the hump. J. B. Hunt company is now a $5 billion company. It employs 14,500 people and has 400 facilities in 48 States. In 1961, J. B. Hunt had an idea and he went to five poultry company executives with his hat in his hand asking for money. They gave him $25,000 in seed money, and that is what he has done with that company throughout the course of his lifetime.
There are lots of examples of folks like that--HP; there is a company in Arkansas called NanoMech, BlueInGreen, and other companies we have seen do this. But many of these companies are very much household names--Google, Facebook, Amazon, eBay, and Apple. All of these companies started with angel investment to get them through what they call the valley of death. The valley of death is usually that period where something has gone from the idea stage to the marketplace. They usually need somewhere between $1 million and $4 million to get their ideas to market.
Our bill is designed to bridge that gap and cross that valley of death so we can see a lot of startup companies come into the marketplace. We are looking for the next J.B. Hunt, we are looking for the next Apple, or the next Amazon.
We are trying to find the next HP, whoever is out there who has great ideas who wants to come in and invest. Angel investment led to the creation of 250,000 jobs in 2009 and 2009 wasn't a great year, but angel investment led to the creation of 250,000 jobs. This represented about 5 percent of all the new jobs in the United States, so this can have a measurable impact. This can move the needle in the right direction.
The time is now for us to work on this. I encourage my colleagues on both sides of the aisle to read the legislation. If they are interested, I would like to visit with them about it. I would love to get this bill moving through the system as quickly as possible.
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