A September editorial (Our View, Sept. 22) in the Press Herald, Kennebec Journal and Morning Sentinel seems to suggest that Maine may not be getting the best bang for its buck when it comes to the Maine Seed Capital Tax Credit. This viewpoint and a blog post one day earlier by the liberal Maine Center for Economic Policy are both short-sighted and misinformed.
Both pieces relate to the release of a report by the Office of Program Evaluation and Government Accountability on the tax credit. The purpose of this first-in-the-nation program was to encourage equity investments in Maine businesses through private venture capital funds – investments that have resulted in millions of dollars of investments since the tax credit was enacted. Also important to note – the Maine Seed Capital Tax Credit has been cited in the Mills administration’s 10-year economic development plan as a strategy to promote innovation.
Without getting into the nitty gritty of the issues brought up in both the editorial and blog, it suffices to say that both opinions fail to understand the tax credit, acknowledge its success or recognize the relatively simple solutions to the issues OPEGA suggests exists with the program.
Let’s start with the fact that this program, like other tax incentives, is working. How do we know that? For starters, it’s due to the simple fact that it is being used by businesses to attract capital investment to the state. One could argue that when you increase investment, jobs will follow and jobs will be created and retained. These investments have helped Maine to thrive and attract the necessary capital to sustain our economy and, in turn, help boost revenues for education, health care and more – in other words, precisely the type of investments at least one commentator thinks this state needs more of.
In a global economy, where Maine already has its fair share of built-in challenges, if you don’t have investment, you don’t have tax revenues and you don’t have money to spend on other things like education and health care. Money simply doesn’t fall from the sky. If we as a state are to compete for the kind of jobs this newspaper and others want to attract, we have to remember that we are competing with 49 other states and countless countries across the globe for all kinds of jobs and opportunities. How is Maine going to stand out if we aren’t providing investors and their jobs with a reason – or incentive – to choose Maine?
Offering the Maine Seed Capital Tax Credit as an incentive to choose Maine is, in large part. the purpose of the program. Can the program be improved? Of course it can, and we don’t claim it shouldn’t or can’t be. In fact, the administering agency for the program, the Finance Authority of Maine, eloquently pointed out that if there are issues with reporting or compliance, the Legislature and stakeholders should have a conversation to fix it. But let’s not make reporting and compliance so burdensome that it results in a disincentive to doing business in Maine.
Maine’s Seed Capital Tax Credit has been hugely successful. So much so that other states have adopted it as a model. As I pointed out earlier, businesses – and the states that want and need them – operate in a pure global competition model when it comes to attracting capital. Other states offer far more than Maine can hope to provide when it comes to investment incentives. But the Maine Seed Capital Tax Credit places Maine in a stronger position to compete. Let’s not lose sight of the importance of that, and the significance of these programs to Maine’s economic future and people.
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