Tax breaks for angels

Almost a year ago, a Minnesota company announced it would move to Wisconsin because of the tax policies of Minnesota which made it difficult to attract investment.

“We’re not getting the job done in Minnesota,” said VitalMedix CEO and president Jeff Williams told the Star Tribune at the time. “Angel investment in the Twin Cities has almost dried up. People are just sitting on their money. The past year has been the most difficult that I’ve ever seen in my career. It’s extremely difficult and frustrating.”

An “Angel investment” tax credit rewards investment in companies with tax breaks. Investing in a start-up company, especially in the high-tech world, is risky. The angel investor credit provides a cushion for the investor, its proponents argue.

Wisconsin has such a program. Minnesota doesn’t.

In December, VitalMedix made the move to Hudson. How’s it going for the firm in its new state? It’s not. A month ago it filed for bankruptcy.

Other companies, however, have been able to get the green in Wisconsin. Rapid Diagnostek, which moved from St. Paul to Hudson in 2008, recently received a $4 million investment.

The Minnesota Legislature this session has been debating whether to offer the tax credit to the investors and, if so, whether it would be paid for by removing tax credits to some low-income individuals.

The House is debating a bill this afternoon that includes the angel investment. You can watch the debate here.

3:39 p.m. – The House passed the bill 112-20.