Arizona Growth Foundation
Biz group: Use state tax credits to spur venture capital
Arizona can help small businesses expand and create jobs by following Utah’s lead and using tax credits to stimulate investment by venture capitalists, a group of business leaders and investors told lawmakers Monday.
“This is a great town to start a business in,” said John Kowalski, founder of a group calling itself the Arizona Growth Foundation. “We just have to make sure that we can continue that development and get them the funds they need to grow.”
Kowalski told the group of lawmakers that small business owners are worried because traditional sources of capital are drying up.
The group is proposing legislation that would create a system of tax credits administered by an oversight board that would offer as incentives to both in-state and out-of-state investors.
The idea is modeled after the Utah Fund of Funds, a $300 million program created in 2006 that offers an alternative source of capital to entrepreneurs in that state.
In effect, the program has the state using tax incentives to minimize the risk for those looking to invest in small businesses.
The group is proposing that Arizona start its own program by offering $100 million in tax credits.
“Properly written and properly implemented, a program like the Utah Fund of Funds could generate thousands and thousands of jobs,” Jeremy Neilson, former managing director of the Utah Fund of Funds, told the lawmakers.
Neilson said Utah’s program had created over 3,000 jobs and created a $60 million net increase in state tax revenues.
Sen. Michele Reagan, R-Scottsdale, said lawmakers owe it to constituents to evaluate such options in the interest of creating jobs.
“The only way that companies are going to have the ability to hire new people and grow is with venture capital being infused into our economy,” she said.