Wednesday, July 15, 2009

High-Tech Industry Wins Big in Wisconsin

Gov. Jim Doyle signed the 2009-11 biennial budget last month, providing funding for university-based research and enhancing tax credits for angel and venture investors supporting high-tech R&D.

Several of the governor's priorities outlined earlier this year in the Digest as part of the state's stimulus plan were funded this session, including the following provisions to enhance the Angel Investment and Venture Capital Tax Credit programs, known as Act 255:

Tripling the Acceleration Wisconsin tax credit from $1 million to $4 million for angel and venture investors in support of startup technology companies, beginning retroactively for the 2008 tax year;

Tripling the annual pool of credits available from $5.5 million to $18.25 million per year for angel credits and from $6 million a year to $18.75 million a year for venture credits, beginning Jan. 1, 2011;

Raising the aggregate creditable investment from $8 million per year from any combination of angel or venture sources, beginning Jan. 1, 2011;

Allowing angel investors to claim the entire 25 percent credit on their investment in the first taxable year; and,

Permitting insurance companies to claim the venture capital investment tax credit against gross premium tax liability.

The enacted budget also funds several TBED initiatives from the governor's budget proposal (see the Feb. 25, 2009 issue of the Digest). They include:

Providing an R&D tax credit for businesses that increase R&D by more than 125 percent of the company's three-year R&D average in the form of an income and franchise tax credit worth $1 for every $1 investment above 125 percent beginning Jan. 1, 2011;

Creating a capital gains tax exemption for investments of up to $10 million in new businesses. The pool of available credits will be tripled beginning in 2011; and,

Exempting the sales and use tax for machinery and other tangible personal property used for qualified manufacturing or biotechnology research, effective Jan. 1, 2012;

In support of new job creation, the enacted budget consolidates five existing tax credit programs, including development zones, enterprise development zones, agricultural development zones, technology zones and airport development zones. The goal is to further target those credits to businesses that create jobs, invest capital, and provide training and retraining to new and incumbent workers, according to the governor's office.

University-based R&D investments include $8.2 million for the Wisconsin Institute for Discovery for research in biotechnology, nanotechnology, and information technology. The institute is part of the Grow Wisconsin Plan first announced by the governor in 2003 (see the Sept. 19, 2003 issue of Digest).

The enacted budget also includes the governor's recommendation to provide $8 million over the biennium to establish University of Wisconsin Bioenergy Initiatives at the Madison, Stevens Point and River Falls campuses for projects to develop the next generation of bio-based fuels and energy. To establish the Wisconsin Genomics Initiative for research into personalized health care for disease identification and prevention, the budget appropriates $2 million in FY10.

Lawmakers allocated $25 million in FY11 for the Wisconsin Covenant Scholars grants. This appropriation will establish a funding base for the grants, which are available to students who maintain a B grade average who are entering into the higher education system in the fall of 2011.
The 2009-11 enacted budget is available at:

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