Illinois General Assembly passes Angel Tax Credit with overwhelming bipartisan support

The Illinois General Assembly late yesterday passed—with overwhelming bipartisan support—an Angel Tax Credit that incentivizes early-stage investment in Illinois technology companies. The Governor, whose office worked hard to pass the credit, is expected to sign the bill (SB 2093) or a second measure (SB 3710) with an identical Angel Tax Credit sent to the Senate yesterday by the House.

“Today's most powerful job engines are small innovative firms. Yesterday Illinois took a huge step in helping to create and attract those companies”

Knowledgeable observers expressed certainty the program would be enacted into law this spring or in November at the latest. The legislation, which when enacted will be effective on January 1, 2011, provides "angel" and early-stage institutional investors with a capped 25 percent credit against state taxes when the investors provide funding to small, early-stage technology firms.

The effort to enact the credit was led statewide over a two-year period by the Illinois Biotechnology Industry Organization (iBIO), which built a large statewide coalition in support of the measure. iBIO's President and CEO David Miller hailed the bill's passage as a major step forward. "Today's most powerful job engines are small innovative firms. Yesterday Illinois took a huge step in helping to create and attract those companies," he said. "It's great news for our economic recovery and for the future of Illinois."

The Kauffman Foundation, National Academies of Science, Brookings Institute and others consider small innovative companies as the keys to global competitiveness and job creation, identifying them as major drivers of tax revenues and needed public services. Although Illinois is a leading state for many types of basic research, it has lagged other states in providing supportive programs for early-stage technology firms. "The Angel Tax Credit constitutes a big step in changing that situation," Miller said. "The sleeping giant is waking up."

Miller praised members of the state General Assembly. Senator Dan Kotowski (D-Park Ridge) authored the bill that passed and pushed relentlessly for its passage. According to Miller, "Senator Kotowski deserves great credit and the community's heartfelt thanks."

The primary legislative champion for the Angel Tax Credit and other startup programs in the General Assembly over the last two years, Miller said, was Rep. Susana Mendoza (D-Chicago). "Rep. Mendoza is an inexhaustible champion for building jobs and prosperity in Illinois," Miller said. "She created a remarkable coalition of advocates in the House and worked with the leadership, other legislators and Governor Quinn's office to make this happen. Illinois' innovation community couldn't ask for a better supporter."

"To make important changes in state policy, you need tireless leadership. iBIO provided that leadership. Without iBIO's unflagging devotion to the twin causes of technology startups and job creation, this never would have happened. Illinois is a better place to do business today because of iBIO," responded Rep. Mendoza.

According to House Majority Leader Barbara Flynn Currie (D-Chicago), "The House Leadership recognizes the importance of technology's role in creating high-paying jobs in Illinois. Passage of this bill is a signal to the world that our state intends to translate its world-class research into a world-class technology economy."

Another important legislative supporter, Miller said, was Senator Michael Frerichs (D-Champaign) who twice guided an Angel Tax Credit bill through the Senate on virtually unanimous votes.

A statewide coalition numbering about 200 organizations proved critical to the bill's passage. Among the leaders of the statewide coalition singled out for praise by iBIO's Miller is TechAmerica, whose Midwest Executive Director, Ed Longanecker, recruited scores of corporate supporters across Illinois. "The angel tax credit is a critical tool in our efforts to drive growth, innovation and investment in the Illinois technology industry. We commend and thank our state legislators and iBIO for their leadership and support of this important initiative," said Longanecker.

In addition to the large group of companies and associations advocating for the Angel Tax Credit, many of Illinois' top research universities put lobbying efforts and endorsements behind the measure. "There's no reason why Chicago and Illinois should not be global leaders in building a technology economy," said Henry Bienen, President Emeritus of Northwestern University and an advocate for the bill. "Now we can build technology startups here instead of watching them drift off to other states. I salute iBIO for its hard work in engineering this important breakthrough."

Veterans of the Midwest technology startup community immediately hailed this achievement. "It's hard to overstate the importance of this legislation. By strongly incentivizing entrepreneurial investment, the State has positioned itself to reverse the brain drain and facilitate entrepreneurial job growth, the driver of the US economy," said Tom Churchwell, managing partner of Midwest Venture Partners, an early-stage venture capital firm headquartered in Chicago.