[Congressional Record Volume 157, Number 15 (Wednesday, February 2, 2011)]
[Senate]
[Page S483]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. PRYOR:
  S. 256. A bill to amend the Internal Revenue Code of 1986 to allow a 
credit against income tax for equity investments in small business 
concerns; to the Committee on Finance.
  Mr. PRYOR. Mr. President, we know we need to focus on cutting our 
spending. We know we need to focus on the tax reform effort. I think 
everybody generally agrees on that. Although they may disagree on what 
the particulars would be, they agree we need to do those two things. 
The third thing we also must do is to focus on the economy and jobs. 
This is something that we have seen in this country over the last 2\1/
2\ years, where we have gone through a very harsh, very difficult 
recession and we have seen an unemployment number that stays stubbornly 
high. We have seen a lot of topsy-turvy economic numbers over the last 
2\1/2\ years, and I believe the Congress--the House and Senate--and the 
White House need to set the table for job creation and economic growth 
in this country, and we need to do it in a very smart way.
  Today, I am here to talk about the angel investment tax credit bill I 
am introducing. I want to encourage my colleagues to consider reading 
the bill and becoming cosponsors. I would love to be working on this 
over the next few weeks to get a broad base of support and to get as 
much emphasis on this effort as possible right now. It is one of many 
job-creating pieces of legislation I am interested in in this Congress, 
but I would love to get as many colleagues as possible interested now 
to look at this and see if it is something we could pass sooner, rather 
than later, around here.
  The angel investment tax credit is modeled after the new market tax 
credit, and it would provide a 25-percent Federal income tax credit for 
investing in qualified early-stage small businesses. The focus will be 
on advanced manufacturing, aerospace, biotechnology, clean energy, and 
transportation. The bill would provide that up to $2 million per year 
in tax credit-eligible cash equity investments could be made, with a 
total of $10 million per small company. The goal would be that for 
every $1 we put in, there would be $4 of private-sector stimulus.
  This is the private sector getting back on its feet with a little bit 
of grease provided by the government to get things going in the right 
direction through the Tax Code. The bill I have written would authorize 
$500 million per year for 5 years for these tax credits. As I said, 
this proposal is expected to stimulate $2 billion per year in new 
capital formation.
  Let me give one quick example of how this can work. All these 
companies on this chart here started with an angel investment to get 
over the hump. What happens is someone will have a good idea. They 
think they can innovate, they think they can produce, they think they 
can have value in the marketplace, but they can't get the capital in 
order to get established. They can't quite get over the hump. J. B. 
Hunt company is now a $5 billion company. It employs 14,500 people and 
has 400 facilities in 48 States. In 1961, J. B. Hunt had an idea and he 
went to five poultry company executives with his hat in his hand asking 
for money. They gave him $25,000 in seed money, and that is what he has 
done with that company throughout the course of his lifetime.
  There are lots of examples of folks like that--HP; there is a company 
in Arkansas called NanoMech, BlueInGreen, and other companies we have 
seen do this. But many of these companies are very much household 
names--Google, Facebook, Amazon, eBay, and Apple. All of these 
companies started with angel investment to get them through what they 
call the valley of death. The valley of death is usually that period 
where something has gone from the idea stage to the marketplace. They 
usually need somewhere between $1 million and $4 million to get their 
ideas to market.
  Our bill is designed to bridge that gap and cross that valley of 
death so we can see a lot of startup companies come into the 
marketplace. We are looking for the next J.B. Hunt, we are looking for 
the next Apple, or the next Amazon. We are trying to find the next HP, 
whoever is out there who has great ideas who wants to come in and 
invest. Angel investment led to the creation of 250,000 jobs in 2009 
and 2009 wasn't a great year, but angel investment led to the creation 
of 250,000 jobs. This represented about 5 percent of all the new jobs 
in the United States, so this can have a measurable impact. This can 
move the needle in the right direction.

  The time is now for us to work on this. I encourage my colleagues on 
both sides of the aisle to read the legislation. If they are 
interested, I would like to visit with them about it. I would love to 
get this bill moving through the system as quickly as possible.
                                 ______