Popular Ohio investor tax credit could expire as soon as this summer
January 12, 2012
Brandon Glenn
MedCity News
A popular Ohio tax credit that investors and entrepreneurs swear by is in danger of expiring as soon as this summer, and it’s unclear whether state lawmakers have any desire to continue the credit.
The state is authorized to issue a total of $45 million in tax credits under its Technology Investment Tax Credit (TITC) program, in which investors who put money in approved companies are eligible for a tax credit of up to 25 percent of the amount they invest.
The looming problem for investors and entrepreneurs is that the state has already issued $38.2 million through the credit, and the $45 million cap could be reached as soon as the summer, according to a spokeswoman for the Ohio Department of Development. Raising the cap requires action from the Legislature.
Perhaps more troubling for investors is that the issue doesn’t seem to be anywhere near a top priority for Gov. John Kasich or Ohio’s Republican-led House and Senate.
“The program is being looked [at] and evaluated,” said Rob Nichols, a spokesman for Kasich. “We’ll have more to say in a month” when the administration unveils a new economic development plan, Nichols said.
A spokesman for the Senate Republican caucus was equally noncommittal. “As of now, there has not been any real discussion about raising the cap,” said Sam Rossi. “It’s not something that we’re necessarily against or have a stance on; it’s just that the issue hasn’t been ventured into a great deal.”
It’s difficult to overstate how much investors and entrepreneurs who’ve benefited from the credit love it — after all, we are talking about free money. Many Ohio medical technology entrepreneurs say the credit has been a critical component in launching their companies.
“It can be the turning point of whether somebody invests in your company,” said Mike Haritakis, an executive vice president with Cleveland-area medical device firm Thermedx. Thermedx has taken advantage of the tax credit like few others, becoming one of just 11 companies to reach the maximum $1.5 million that’s eligible to be raised through the credit.
Since the tax credit was launched in 1996, it’s led to more than 3,500 investments totaling more than $150 million in 590 companies, according to the state.
Democratic Rep. Jay Goyal said he'd like to see the tax credit reauthorized, but he doubts it will happen. "While I'm supportive of it personally, I'm extremely skeptical that the Legislature will increase the amount of tax credits for this program," he said.
Goyal also noted that a bill he introduced that would expand a state-backed venture capital program hasn't been given a hearing by current House leadership, even though a similar bill passed the House with a 98-0 vote during the last legislative session. "That seems to indicate to me that innovation and entrepreneurship don't seem to be a high priority for the House, at least," he said. (A call to the Speaker of the House wasn't returned.)
