South Carolina House of Representatives Moves Forward on New State Crowdfunding Economic Strategy
House Ways and Means Subcommittee Votes to Move HB 3088 to Full Committee.
- Columbia, SC (1888PressRelease) April 18, 2015 - The SOUTH CAROLINA SMALL BUSINESS TAX INCENTIVES ACT (HB 3088), was voted out of the House Ways and Means Subcommittee on Sales and Income Tax and moved to the full committee on April 16, 2015.
The bill is sponsored by Representative Dwight Loftis, of Greenville, South Carolina, the Chairman of the House Committee on Economic Development.
The bill is the first attempt in the nation to link state economic development strategy to crowdfunding.
"The South Carolina legislation does not contain the flaws and defects in the template crowdfunding legislation passed in other states," said Thomas Vass, a regional economist and owner of a crowdfunding website, The Private Capital Market, Inc.
Vass said the South Carolina legislation is the first in the nation to provide both companies and in-state investors income tax benefits for making capital investments in both new and operational companies.
"In other states, the so-called crowdfunding legislation tends to over-emphasize new ventures, to the detriment of small operational technology companies," said Vass. "But, the great jobs growth and economic growth comes from existing firms, primarily in manufacturing, that need small amounts of growth capital to get a new generation of products out the front door," he explained.
Vass appeared before the Subcommittee to explain key provisions of the bill. Among the features that Vass cited are:
· Allows capital investments in all SC companies but limits the tax incentives to industrial sectors that contribute to future economic growth based upon technological innovation.
· Benefits existing established manufacturing firms, who need growth capital, in addition to assisting startups. In other states, the exclusive focus is on startups, which misses the key economic growth factor of job growth from existing manufacturing firms.
· Targets both the initial capital investment going into a company, and the reinvestment of profit back into a second generation of SC companies.
· Does not place arbitrary caps on the amount of capital companies can raise.
· Does not impose All or nothing on companies (Rules 10b-9 and 15c2).
· Provides a framework for regulating private equity funds that target capital to South Carolina companies.
· Provides consumer and investor protection with an investment disclosure brochure that also serves as the investor's verification as accredited or non-accredited.
Vass mentioned in his presentation that the next state economic steps after the enactment of HB 3088 include:
· Creating the regulatory framework for regional private equity funds to supplement and support companies in 8 SC regions.
· Directing the South Carolina Department of Commerce to prepare detailed econometric estimates of the economic growth path for each regional economy so that business and financial leaders have some guidance on the most effective investment strategies for the region.
· Linking the use of crowdfunding to the broader economic strategy of targeted industrial recruitment and the use of private equity instead of tax incentives as an industrial recruitment tool.
· Linking the broader economic strategy and tax incentives of this bill to economic tax incentives for private firms to do advanced skill training in certain high skilled trades, and authorize industry trade association to conduct skill training certification exams, and have the SC Department of Labor issue skill training certificates of completion.
About Thomas Vass: Thomas Vass is a North Carolina regional economist, and a fee-based portfolio manager with a specialty in technology stock selection. He is the inventor and holder of a technology stock selection business and research patent based upon his research about capital investments and stock price. (Vass 7,251,627 July 31, 2007, Method of identifying a universe of stocks for inclusion into an investment portfolio). In addition to managing money, he manages an accredited investor crowdfunding website, The Private Capital Market, and provides advice to private technology companies raising capital.
Please visit www.businesscapitaladvice.com for more information.
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