On Tuesday, February 8, the Maine State Chamber of Commerce’s Linda Caprara testified in opposition to LD 1941, An Act to Clarify and Update the Maine Seed Capital Tax Credit, sponsored by Sen. Glenn Curry (D-Waldo). The Maine State Chamber opposed LD 1941 because the bill as drafted would reduce the existing credit from 40% to 30%. Caprara testified that the credit keeps changing and that businesses need stability and predictability to invest.
Maine was the first state in the nation to enact the Maine Seed Capital Tax Credit Program. Maine’s seed capital tax credit program has provided a powerful economic development tool for the state by encouraging equity and near equity investments in Maine businesses directly and through private venture capital funds. This program in particular supports Maine small businesses, entrepreneurs, and startup companies, something which Maine prides itself on. The program encourages investors to commit capital to Maine companies that might otherwise be invested outside the state.
Caprara testified that the Maine Seed Capital Tax Credit Program was identified in the Maine Strategic Plan as one of the key actions items to promoting innovation in the state. She testified that the plan referenced that every dollar of Seed Capital Tax Credit raises ten dollars of private investment. The plan further indicated that an increase in the ceiling from $5 million to $15 million would help about 40 startups and create 2,300 new jobs.
However, over the years unfortunately, the credit has been reduced and changed. The Maine State Chamber testified that according to the Finance Authority of Maine (FAME), the credit was a 50% credit from 2014 to 2020. In March 2020, the Legislature lowered the credit to 40%. Through the years, the aggregate and annual limits have also changed numerous times as well. The Legislature and Governor Janet Mills approved via Public Law 2020, Chapter 616 (the Supplemental Budget) an increase in funding of the program, tripling the annual program limits from $5 million per year to $15 million per year. Unfortunately, yet another change was made last session, and the ceiling was lowered from $15 million to $13.5 million for 2021 and 2022.
The Maine Seed Capital Tax Credit Program clearly places Maine in a stronger position to compete and needs to be kept intact and stable. The work session on the bill is scheduled for Thursday, February 17 at 9:00 a.m. If you have any questions, please contact Linda Caprara by calling (207) 623-4568, ext. 106, or by emailing email@example.com.