Efficacy of Business Angel Tax credits, and targeted Supply-side economic policy

• Main Author: Schulte, Kevin A.
• Language: EN
• Published: Saint Louis University 2016
• Subjects: Entrepreneurship|Economic theory|Public policy
• Online Access: http://pqdtopen.proquest.com/#viewpdf?dispub=10164932

<p> New firm births, and their associated job creation, are widely considered an underpinning to a healthy and growing economy. U.S. state legislatures have taken notice of this phenomenon, as well as the importance of accredited Angel investors who invest in new enterprises. As such, about half the states have passed Supply-side oriented Angel tax credit legislation to address a supposed new venture funding gap, ominously referred to as the Valley of Death, in hopes allocating financial resources more efficiently than the free market. This legislations&rsquo; principal intent is most often to stimulate incrementally new technology job growth. Targeted tax credits authorized by Acts over the last 20 years, incentivizes individuals with over $1 million in net worth, known as Accredited Angels, to increase funding to early stage firms by lowering their risk and cost of investing. However, there is ostensibly no empirical program evaluation in the academic literature to determine if the billions of dollars in credits often redirected from other state programs, created incrementally new jobs. Designating OES technology jobs data at the state level as the outcome variable, dual subject repeated measures pretest-posttest with control group quasi-experimental analyses were conducted to determine if the Angel tax credit legislation passed by Wisconsin and Kansas in 2004 affected technology job growth. Multiple between subject LMM results find, and then verify, that angel tax credits have no long-term impact on incremental technology job growth (p?.80). Within subject MANOVA results appear to support a notion sig.10 that targeted Angel tax credits of about 50% could be additive to states&rsquo; fiscal auto-stabilizers arsenal designed to: (1) address liquidity and credit constraints, and (2) mitigate increased unemployment levels, both intrinsic to a recession. Conclusively, the economic development policy that ineffectually applies the visible hand of Angel credits to address a likely non-existent Valley of Death funding gap needs to meet its own demise. </p>