The Bluegrass Institute has cautioned before that Kentucky’s lack of modern, business-friendly tax codes puts the state at a disadvantage in competing for business to settle here. It’s not just theory.
Yesterday’s Kentucky Enquirer had a front page/inside article, “Fear of losing startups may lead Ky. to offer tax credits, Ohio incentives already snagged OneMorePallet.”
The article discusses how Ohio used its more business-friendly public policies to snag a start-up company that actually first organized in Northern Kentucky.
Says Northern Kentucky business leader Adam Caswell, vice president of public affairs for the Northern Kentucky Chamber of Commerce:
“We don’t have the tools here that are available across the river, and our worst fears came true: We don’t have the resources to build these companies, and they’re going across the river.”
So, what is going on? Ohio has a tax credit for “Angel Investors,” who take chances on funding startup companies. Kentucky lacks this entrepreneurial tool.
The Enquirer article points out:
“For several years, the chamber has lobbied the General Assembly to enact an individual income tax credit for angel investors. Such a tax credit spurs investment by offsetting the risk for investors, since a high percentage of startups fail.”
Ohio’s angel investor fund tax credit is so popular that the fund ran dry a year ago.
As soon as that fund gets recharged, watch for more Ohio poaching of Kentucky business startups – if our legislators don’t do something to meet the Ohio threat head-on.
But, an Angel Investor credit is just one, small part of what is really needed to grab more businesses for Kentucky. The longer we delay taking action, the more business will be going elsewhere.