People often lament that Republicans and Democrats can’t accomplish anything because they have nothing in common.
I think Republicans and Democrats can’t accomplish anything because they do have something in common: some politicians in both parties are equally clueless about how to promote high-tech innovation that creates high-paying jobs.
Let’s take a stroll for a moment into state senate District 56 in Minnesota, where Republican Ted Lillie, a newspaper publisher, is challenging Sen. Kathy Saltzman (D-Woodbury) in this fall’s election.
Saltzman, you may remember, is the prime architect of the state’s historic $60 million angel investment tax credit. The senator rightfully deserves props for championing what is arguably the most significant piece of economic development legislation to originate from St. Paul in a very long time.
Lillie, however, doesn’t see this as much of an accomplishment. In fact, he sees this as Saltzman’s liability.
In a recent letter to the Stillwater Gazette newspaper, Lillie takes a shot at Saltzman’s role in crafting the angel credits.
“Minnesota must compete on the global stage in order for our citizens and economy to thrive and survive, and our legislative policies must be upgraded if we are to compete successfully,” Lillie writes.
“My opponent recently showcased her efforts to help a few targeted businesses near the University of Minnesota,” he continues. “I applaud any effort to help businesses get started, but we need to take a serious look at our business policies and observe how they affect existing businesses here in our community — not just a chosen elite few.”
Sigh. Time to sharpen my knives again.
I suppose I should applaud Lillie for proving that stereotypes aren’t always true — that is, Republicans are business savvy.
For someone who preaches jobs (“The Path to Prosperity: Jobs, Jobs, Jobs” reads his website) and portrays himself as a business whiz concerned about Minnesota’s place in the global economy, Lillie shows an uncomfortable lack of perspective, not to mention math and geography.
The state Department of Employment and Economic Development (DEED) has certified over 50 companies across the Twin Cities (and as far as Anoka and St. Cloud) for the angel tax credit program. That doesn’t sound like “a few businesses near the University of Minnesota.”
In only the first month of the program, DEED awarded $573,000 in credits to investors funding these startups. Since the credits are worth 25 percent of the investment, that means angels already have spent around $2.3 million.
Lillie also argues the angel credits only benefit “a chosen elite few.”
According to the law, eligible companies must develop proprietary technology in “aerospace, agricultural processing, renewable energy, energy efficiency and conservation, environmental engineering, food technology, cellulosic ethanol, information technology, materials science technology, nanotechnology, telecommunications, biotechnology, medical devices, pharmaceuticals, diagnostics, biologicals, chemistry, veterinary science.”
Few? Hardly. Elite? Well, if you mean advanced technology that could create new industries and high-paying jobs, then guilty as charged.
But something tells me that’s not how Lillie defines “elite.” The populist tone reminds me of Rep. Ann Lenczewski (D-Bloomington), the House Tax Committee chair who calls angel credits giveaways to the rich. Or Mark Dayton, the Democratic gubernatorial candidate whose economic platform consists of raising taxes on the wealthy and promoting tourism.
Lillie’s ideas look identical to Rep. Tom Emmer, the Republican nominee to succeed Gov. Tim Pawlenty: cut taxes and bureaucratic red tape, which neither man really defines.
That’s not to say Minnesota doesn’t need tax reform. As Lillie correctly notes, the state consistently ranks near the bottom in business tax environment.
I just take issue with Lillie dumping on angel credits. Cutting taxes and boosting early stage capital are not mutually exclusive. In fact, the 21st Century Tax Reform Commission appointed by Pawlenty — a Republican — recommended both reducing corporate taxes and providing tax credits to angel investors. Early stage capital is especially scarce in Minnesota, a problem made worse by the weak economy.
To speak about Minnesota competing in the 21st Century global economy, and yet downplay the economic tools that we need to compete in that economy, seems disingenuous. Minnesota’s economic future depends on medical technology, information technology and pharmaceuticals — nascent industries that needs angel investors.
Lillie should promote tax reform but not at the expense of an incentive that helps high-tech entrepreneurs, the very people he professes to support.