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Angel Investor Tax Credit
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Connecticut lawmakers are considering a bill that would grant tax credits to so-called “Angel Investors”.

Across the country, small start-up technology companies have been having a hard time raising the money they need to get off the ground. So networks of private investors called Angels have begun pooling their dollars and investing in these start-ups. States are wooing Angels..anxious to encourage them to invest. Matthew Nemerson is president of the CT Technology Council. "Connecticut suddenly finds itself surrounded by states that are actively trying to get wealthy people to make investments in technology companies in their state. CT doesn’t have a program like that right now."

Nemerson says the state needs a tax credit for Angel Investors in order to stay competitive. He supports a proposal that would grant tax credits equal to a quarter of an Angel’s investment in a start-up. The credit could be used to offset an individual’s personal income tax liability.

Critics of the idea say business tax credits in Connecticut have jumped dramatically since the late 1980s. Shelly Geballe, president of Connecticut Voices for Children says the state should take a hard look at each new tax credit to see whether it’s promoting economic development. "Once its adopted it is not reviewed annually. It just stays on the books and becomes a hidden entitlement. And the revenue loss to the state just continues unabated".

Geballe is calling for a moratorium until there’s a comprehensive assessment of all tax credits in Connecticut. The bill establishing tax credits for Angel Investors has gone through committee and awaits action in the State Senate.